And some of the companies that promise student loan debt relief are scams.
It’s illegal for companies to charge you before they help you.
Reasons to consolidate loans If you are having problems making your monthly payment but are concerned about the impact of loan consolidation, you might want to consider deferment or forbearance as options for short-term payment relief, or consider switching to an income-driven repayment plan.
Private loans have to be consolidated with a private lender.
When you consolidate your federal student loans, you get a Direct Consolidation Loan, which has a fixed interest rate for the life of the loan.
The fixed rate is the weighted average of the interest rates on the loans being consolidated.
If you have private loans, talk to your loan servicer.
For federal loans, call the Department of Education’s Loan Consolidation Information Call Center at 1-800-557-7392.
Some private financial aid providers may use your FAFSA information to determine whether you qualify for their aid. When you fill out your FASFA, you will also create an FSA ID.
Perkins loan borrowers have unique deferment and cancellation rights that may be lost when consolidating.
Consolidation has important pros and cons to consider, especially since once your loans are combined into a Direct Consolidation Loan, they cannot be separated.
If some or all of your loans have variable interest rates, when you consolidate into a fixed loan may affect the interest rate of your loan.
Consolidating federal loans with the federal government is free.