Student Loan News, Updates and Blog Posts

There has been an increase in the amount of student loan borrowers asking this question over the past month or two – here is a little information that should help.

You cannot consolidate federal student loans while in school, however you should consolidate as soon as you graduate or drop below half time enrollment. This 6 month period prior to repayment beginning is called a “grace period.” During this time, you are not required to make any federal student loan payments. However, if you consolidate during your grace period, you can lock in your interest rate 0.6% lower and still not make any payments until your grace period ends. So, consolidation + grace period = bigger savings.

Already in repayment? No worries – it’s not too late to consolidate. You can still take full advantage of the benefits that consolidation offers even if you have been in repayment for years.

Now onto private student loans. A lot of you probably took out private student loans to help cover the cost of tuition. These loans cannot be combined with your federal consolidation – the rate calculation is completely different, and combining these two types of loans would eliminate all of your federal consolidation loan benefits. We normally recommend that students apply for a private consolidation loan after they have completed their federal consolidation loan process. Federal consolidation can help improve your credit score, and private consolidation is credit based. So, doing one will help the other.

Now that I have thoroughly confused everyone, allow me to summarize:

You can consolidate your federal student loans anytime after you graduate or drop below halftime enrollment. If possible, consolidate during your grace period to take advantage of a lower interest rate. Finally, consolidate your private student loans after you have completed your federal consolidation – it could help you get a lower interest rate.