Welcome to the second part in our student loan consolidation series. To recap, in [Part 1] we had discussed at length the eligibility criteria for consolidation as well as the loans that are currently ineligible for consolidation.
Let us start on a happier note with the two types of loans that can easily be consolidated. They can be categorized as subsidized and non-subsidized loans. This list will prove important not only if you have multiple loans covering your graduation, but also if you are about to get a student loan and hoping to plan ahead for a consolidation in later years.
The Loans That Can Be Consolidated
To begin with, almost every federal loan can be consolidated.
SUBSIDIZED LOANS
- Subsidized Federal Stafford Loans
- Direct Subsidized Loans
- Subsidized Federal Consolidation Loans
- Direct Subsidized Consolidation Loans
- Federal Insured Student Loans (FISL)
- Guaranteed Student Loans (GSL)
You should always check the interest rates on your loans, particularly if you have a subsidized loan that you took out after 2008, because rates are lower on these loans. Though most of the private student loans are capable of being consolidated, the federal consolidation guidelines will not be followed. The following student loans can also be consolidated:
UNSUBSIDIZED LOANS
- Federal Loans:
- Stafford Loans (Both unsubsidized and non-subsidized)
- Supplemental Loans for Students (SLS)
- Parent Loans for Undergraduate Students (PLUS)
- Consolidation Loans
- Perkins Loans
- Direct PLUS Loans (for graduates/professional students)
- Direct Unsubsidized Loans (inclusive of TEACH Grants)
- National Direct Student Loans (NDSL)
- Auxiliary Loans to Assist Students (ALAS)
- Health Professions Student Loans (HPSL)
- Health Education Assistance Loans (HEAL)
- Loans for Disadvantaged Students (LDS)
- Nursing Student Loans (NSL)
Loans That Can Not Be Consolidated
No matter where you go, obstacles will always come your way, and so do some loans which have remained ineligible for consolidation. These include but are not limited to the following:
- Loans that have not been guaranteed by the federal government. Hence, whether they were made by your state or a private lender, they remain ineligible;
- Law Access Loans
- PLATO Loans
- Medical Assist Loans
- Primary Care Loans
Creating Some Distance between Loans
Some loans need to be kept at bay — from one another. These include the federal loans and private loans while consolidating. Consolidating both of them may cause you to forgo certain options e.g. the rights associated with federal loans. As a result you might end under private lender terms with higher interest rates
Such a thing is also possible if you were to consolidate two federal loans like the Perkins loans. The best option is to get in touch with a professional and discuss your consolidating option. Consulting will only increase the chances of making the choice best suited to your circumstances!
Tips To Ease Your Consolidation
Keep in mind that all the federal loans made after July 1st 2006 has a fixed tag for interest rates. Given that the new “consolidated” interest rates are calculated using the average interest rates of all the loans being consolidated, if you have a relatively new loan then it is unlikely that you’ll save much on interest through consolidation.
NOTE: The above “lapse” may be rectified if you have variable rate loans from before July 1, 2006. These interest rates will average out quite less when consolidated and hence will offer a significant reduction in rates for you!
With this we come to the end of part 2 of our guide to consolidating your student loans! Stay tuned for more enlightening guides.
For any queries feel free to get in touch with us!
Sources:
http://studentaid.ed.gov/repay-loans/consolidation
http://loanconsolidation.ed.gov/borrower/bloans.html
http://www.finaid.org/loans/consolidation.phtml
http://www.finaid.org/loans/privateconsolidation.phtml
