Living with two or more student loans can be really challenging, especially for those trying to establish a career or start a family. Fortunately, there is a potential solution to this problem in the form of student loan consolidation.
With loan consolidation, one new combined loan takes the place of your existing loans. The big advantage to this is that it can lower your payments and lower your interest rates. It can also make your life much simpler because you will only have one payment and one lender to deal with.
There is a also ways that you can erase your student loan debt by serving your country and your community. Public Student Loan Forgiveness programs (or PSLFs) allow individuals to get out of some student loans by working for the government or certain non-profit organizations.
The good news is – you can qualify for PSLFs by working at any local, state or federal government job. The bad news is that not every student loan is covered by the program. You will also have to wait 10 years and make 120 qualifying loan payments to achieve total debt forgiveness, so it is not an immediate solution.
With Private Student Loan Consolidation, a private lender pays off your existing loans and issues you a new obligation. In contrast, Direct Student Loan Consolidation is actually a federal-lending program created by The Reauthorization of Higher Education Act of 1992.
President Obama greatly expanded direct student consolidation through the Federal Direct Student Loan (also known as the Obama Student Loan Forgiveness) Program in 2010. This program offers significant advantages for people who are struggling with student loans.
Unfortunately, only certain student loans qualify for PSLF. This means the program may not forgive all of your student loan debt. Under the current program only direct-subsidized, direct-consolidated, direct unsubsidized, Direct PLUS and Stafford loans qualify.
Private student loans and loans that are in default will not qualify for PSLF. If you qualify for PSLF but your loans do not, you will have to consolidate them before applying. Fortunately, it is possible to convert other kinds of student loans to obligations that are eligible for PSLF by taking advantage of the Direct Loan Consolidation program.
Yes, if the loan was sponsored through the U.S Department of Education and you have at least one other Federal Education Loan. This usually means a Direct Loan or a Federal Family Education Loan, but Perkins and PLUS Loans can also qualify.
The following Health Professions Loans are eligible for consolidation under the current rules:
It is often possible to lower your monthly payment and lengthen your repayment period for Health Professions Loans through consolidation. Another great benefit is that you will have just one payment a month to deal with.
We find that it is usually a good idea for a person struggling with a Health Professions Loan to discuss it with a professional, because there are many options available. Despite the advantages to consolidation, there are some borrowers that would be better off going with other options.
Yes. If the lender agrees to the consolidation and it is approved.
Note: if the loan is in default you will have to agree to an Income-Contingent or Income-Based Repayment plan.
Yes, but you can only consolidate loans for programs or degrees that you have completed. This means a person who is in grad school can consolidate the loans they took out to get their bachelor’s degree.
Any degree you are pursuing now is considered in-school and loans for it cannot be consolidated until after graduation.
Yes, there are a number of alternatives for low-income individuals including Income-Contingent or Income-Based Repayment plans. Student Loan Counselors or the Department of Education can tell you what they are.
Yes, but you must add at least one Federal Family Education Loan or Direct Loan to the mix. This means you can consolidate loans you have taken out for your graduate degree with loans taken out for your bachelor’s degree.
You should get some advice if you attempt this because it can be real tricky.