Regular Loan Repayment or Loan Consolidation?
After a student graduates or quits school for six months, the student needs to make a decision concerning
loan consolidation or repayment.
Loan consolidation is usually for your federal loans only. Few alternative loan lenders allow consolidation though you can contact those lenders to see
what programs they have available. More information on alternative loan consolidation. You cannot consolidate
your federal loans with your private alternative loans. Nor can you consolidate your loans with your parent’s PLUS loans. Your parents can consolidate their
PLUS loans just like you can consolidate your federal loans.
You can choose from a wide range of lenders for consolidation. You may want to check with the lender you used for your loans to see what their
programs are before checking out alternative lenders.
A student can learn about their outstanding loans by going to the National
Student Loan Data Base or, if their loans were processed through Great Lakes, by going to Great Lakes
IBIS. Note: Perkins loans are not included on the IBIS list.
Extensive information concerning loan repayment can be found at the
Federal Student Aid Web site. It is important to read
this section carefully, as well as the Study Guide provided, in case there is a potential to have your loans canceled or reduced. Perkins loan recipients, students
graduating in a teaching program or majors where they may be assisting the poor in any capacity will want to study these guides carefully.
It is also important for the student to learn what the payment on their loans would be under the regular repayment program. Most students can contact the
federal guarantor at 800-236-4300 for this information. They can also go to the Great Lakes Educational
Loan Services Borrowers Web site.
General information about federal loan consolidation can be found at My Great Lakes. Both
the
About Loan Consolidation and Consolidation
FAQ sections linked on the left side under "Consolidate My Loans" give valuable general information about consolidation of student loans.
Before the 2006-2007 school year, all Stafford loans were "variable,", meaning interest rates on these loans changes every July 1. Stafford loan
consolidation changes the loan to a "fixed" rate. The loan can also be spread over a longer period of time.
However, by consolidating loans, the student loses their right to a grace period and to other benefits under the regular federal loan repayment program such
as economic hardship, which reduces or forbears the student loan should the student lose his/her job during repayment. It is important to weigh all these pros
and cons of consolidation.
