Need to Consolidate Your Student Loans?
Let’s See What Your State Can Do For You
If you have taken a few minutes to check out our A to Z list of state-specific student loans you’d already know that many states offer very appealing Federal Family Education Loans (FFELs) and private student loans. But you may not know that some, including your own, also feature specially packaged student consolidation loans.
You could be missing out on some very good loan deals from your home state or the state in which you attend a state school.
The College Cost Reduction Act of 2007 really took a bite out of the student lending business, cut its profits significantly in the guaranteed student loan department. Consequently many private student loan lenders have made borrower benefits a thing of the past, eliminating discounted interest rates and limiting loan repayment plans. State student loan programs on the other hand have largely stayed the course. They have some of the most appealing consolidation loans going. Loan deferment options are also available in some states for qualified students.
Benefits of State Student Loan Consolidation
Example:
The College Foundation of North Carolina offers a .25% interest rate reduction for borrowers that automate their loan payments through a debit system. After 24 consecutive on-time payments, the interest rate drops by .5%. After 36 payments, it drops another .5%, and after 48 it drops another 1%. With this model, after 48 on-time payments using the automatic debit option, your interest rate will have dropped by a full 2.25%.
Types of Student Loans to Consolidate
Depending on the state, you could find both federal and private consolidation loans. As with most student loan consolidation programs, state programs will consolidate a variety of federal student loans including the most popular Stafford Loans, Perkins Loans, PLUS Loans, etc. Private consolidation loans may allow you to merge a wide variety of student loans, even mix together federal and private loans.
How Do You Know if Loan Consolidation is For You?
Do you have loans from multiple lenders? Do you struggle to make ends meet so you can cover your student loan payments? Have you missed or been delinquent with student loan payments? Have you ever applied for loan deferment or forbearance? If you answered, “yes” to these questions take our simple self-assessment quiz. Figure out right now if you are a candidate for student loan consolidation. Do this before you get to the point of loan default.
Applying for student loan consolidation is a relatively easy task; you can apply online and get approved pretty quickly. Here are the two types of applications:
- Federal consolidation loans through state programs require no credit checks. Your federal loans are guaranteed, along with the consolidation loan.
- Private consolidation loans may also be applied for via online applications, but your credit history will be a deciding factor. If you have bad credit you may still qualify for private consolidation when you borrow with a credit-worthy co-signor. This offers a strategy: when you make so many consecutive on time payments, many lenders will release co-signors. Use this as a chance to rebuild your credit.
States without Their Own Programs
Companies such as United Student Aid Funds (USA Funds) provide assistance to states that do not have their own government created consolidation programs. USA Funds is the national guarantor for student loans and the designated guarantor for Alaska, Arizona, Hawaii, Indiana, Kansas, Maryland, Mississippi, Nevada and Wyoming.
In many cases your own state can provide the most attractive interest rate plan for your situation. Make sure not to skip this option in your search for the best consolidation interest rate.