Consolidating federal and private school loans what does validating identity mean

“If the terms you’re going to get are the not as generous as the terms you already have, consolidation is probably not a good idea,” she says.Regardless of whether consolidating federal or private loans, there is a catch.When it comes to consolidation, the types of loans you have matters, but most federal loans, including Stafford, Perkins, Direct Plus and Supplemental loans, can be consolidated with other federal student loans.“The interest rate on (federal) consolidation loans is an average of the interest rates on the (federal) loans you’re consolidating,” says Ken O’Connor, director of student advocacy for Fynanz, a New York City firm providing technology for the private student loan market.It also means if you’re a new grad with little credit history, you might need a co-signer to be eligible.If a co-signer is necessary, O’Connor says borrowers should ask if there’s a co-signer release option after a certain period of time.Private lenders require borrowers to pass a credit check to get the best rates.

When eyeing consolidation options for private loans only, Mayotte says borrowers should evaluate the new loan’s hardship protections and repayment terms in addition to the interest rate.

“With (our student loan program), if the borrower makes 12 months of on-time principal and interest payments, they can request to release the co-signer,” he says.

“That creates tremendous flexibility, especially for families applying for loans for multiple kids.” Students consolidating federal loans can do so through the Department of Education’s website at Loan gov, by phone at (800) 557-7392 or by downloading a paper application at Loan gov/borrower/and mailing it in.

Some are better than others, so make sure to look at the varying terms of each one — staying away from charges or origination fees and checking the maximum interest rate so you won’t get burned down the road.

Most also have limits on how much you can consolidate.

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