Types of Consolidation Loans

We offer two types of student loan debt consolidation: federal consolidation loans and private consolidation loans. Learn which is right for you here.

Federal Student Loan Debt Consolidation

Federal student loan debt consolidation is for anyone who has federal student loans that have not been previously consolidated. Federal consolidation loans are sponsored by the government but issued by private lenders. Federal student loan debt consolidation is free and does not require any credit checks or co-signers. Your consolidation loan's interest rate will be determined by taking the weighted average of your current loans' interest rates, then rounding that number up to the nearest eighth of a percent. Your interest rate cannot exceed 8.25% by federal law. Some of the benefits of federal student loan debt consolidation include:

• No sign up fees, prepayment penalties, or other charges
• No credit checks
• Lower your monthly payment by as much as 60%
• Save 0.6% more during grace periods or eligible deferment
• Very low interest rates

Private Student Loan Debt Consolidation

You can take advantage of private student loan debt consolidation for any student loans that do not qualify for federal consolidation. Private consolidation loans are much like any other private loan, in that they require a credit check and have certain fees and charges associated with them. If you do not qualify for private student loan debt consolidation on your own, you can also recruit a co-signer. Usually, private consolidation loans come with a low, fixed rate for the first year, followed by a competitive, variable rate thereafter. The benefits of private student loan debt consolidation include:

• Reduce your monthly payments by as much as 45% in the first year
• Enjoy up to 30 years to repay
• No prepayment penalties
• Release co-signer from agreement after first 48 payments made on time
• Option to make interest-only payments for a certain period
• Get interest rate reductions when you sign up for automatic debit

If you have any questions, please visit our FAQ page.