Loan Consolidation or Refinancing

With loan consolidation, you can lower your monthly payments by combining several loans into one packaged loan and extending your repayment period. Consolidating your loans may increase the amount of interest you pay over the life of your loan. However, it may be possible to refinance several loans, or just one loan, to secure a lower interest rate.

You may want to consider consolidating your loans if:

• You can't afford the monthly payments on your federal student loans and you don't qualify for a postponement.
• You want to refinance at a lower interest rate. This will be harder to do now that interest rates on most student loans are fixed.
• You want to get out of default fast so that you can qualify for new loans and grants to attend school.
• You don't have loans through the government's Direct Loan program, but you want to get access to the income contingent repayment plan.

Many different lenders, including the federal government, offer consolidation loans. Your repayment options will vary slightly depending on the consolidation lender you choose. Ask potential lenders to help you calculate your payment amounts and overall costs before you make a decision.

With only a few exceptions, once you get a consolidation loan, you can't consolidate again. So be careful and make sure you get the best deal possible.

Loan consolidation has become popular in recent years, and many lenders market it aggressively. Be sure you explore the options available to you and understand the terms of any consolidation loan before you agree to one. The Federal Direct Consolidation Loan Information Center's website (http://loanconsolidation.ed.gov) is a good source of information.