Consolidating personal student loans

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It also means if you’re a new grad with little credit history, you might need a co-signer to be eligible.

If a co-signer is necessary, O’Connor says borrowers should ask if there’s a co-signer release option after a certain period of time.

When it comes to consolidation, the types of loans you have matters, but most federal loans, including Stafford, Perkins, Direct Plus and Supplemental loans, can be consolidated with other federal student loans.

“The interest rate on (federal) consolidation loans is an average of the interest rates on the (federal) loans you’re consolidating,” says Ken O’Connor, director of student advocacy for Fynanz, a New York City firm providing technology for the private student loan market.

Those seeking consolidation should also review their repayment options at Student gov, so they’re prepared to pick the proper repayment plan.

Once the application is submitted, the federal government estimates that it takes 60 to 90 days to officially complete the consolidation process.

These include deferment — the ability to suspend payments under certain circumstances such as serving active military duty, attending further education or unemployment — and forebearance, which allows borrowers to postpone payments while still accruing interest, in cases of financial hardship.

Private loans can typically only be consolidated with other private loans.

Private lenders require borrowers to pass a credit check to get the best rates.

That means if your score isn’t superhigh, you could wind up paying more if you consolidate.

“If the terms you’re going to get are the not as generous as the terms you already have, consolidation is probably not a good idea,” she says.

Regardless of whether consolidating federal or private loans, there is a catch.

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