You can get a consolidation loan from any private lending institution with government approval, or from the Department of Education itself. Some offer favorable terms like interest-rate reduction for making on-time payments or choosing automatic withdrawal; others may offer repayment plans that better suit your financial situation.Fin maintains a list of student loan institutions, including large banks; private companies like Sallie Mae; and state education system lenders like the Missouri Higher Education Loan Authority and the Utah Higher Education Assistance Authority.You may also have access to a new repayment schedule (like an income-contingent plan) that’s a little easier on your wallet.
If you’re just finishing college, you’ll want to consolidate your loans after you graduate but before your grace period ends, so that you can take advantage of the lower in-school interest rate (the 91-day T-bill rate plus 1.7 percent, rather than the standard repayment rate of T-bill rate plus 2.3 percent).
Timing is everything: You’ll need to complete all the paperwork and have it processed and approved before repayment begins.
A consolidation loan is just what it sounds like: You can take two or more outstanding loans and refinance them into one.
As with the Stafford Loans, there are both Direct and FFEL consolidation programs.
To a college grad swamped with multiple student loans that have come due, loan consolidation is an enticing option.