How do I Consolidate a Loan?

Understanding various ways that you can make the college loan process easier on yourself is important knowledge to have going into school. A majority of prospective college students will need some source of financial help, and if you’re included in this chunk of the population and don’t opt to apply for scholarships, odds are you’ll need to understand the way loans work and the fine print involved in your decision making. Many students, at one point or another, choose to either refinance or consolidate a loan, the latter of which is the source of much confusion among borrowing students.

What to Know About Student Loan Consolidation

When it comes to consolidating loans, knowledge is power, and it is crucial to understand what exactly you’re doing with your money. Simply put, “loan consolidation” is exactly what the dictionary definition makes it sound like; you’re taking multiple payments you owe and combining them into one. There are various reasons students choose to consolidate loans, ranging from streamlining-slash-simplifying their payment process to changing their debts around due to a change in their personal financial situation. Either way, it is important to know, before you do anything, if it is possible to consolidate your debts, because it is dependent on where your credit line is.

How to Consolidate A Loan

Once you know if consolidation is an option for you, your next step is to contact your loan provider, who will talk you through the process and give you your next step, which is often one of two things: adding additional funds to your existing line of debt, i.e. shifting your debts to the same account, or creating a new line that combines all sources of debt. The process depends on your source of debt. For instance, federal loan consolidation moves all your debt to one bill and gives you up to thirty years to pay it off, while private sources could vary in terms of the repayment period.

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Consolidating Federal Loans

Federal loan services are generally more popular than private loans, meaning, in turn, that they are more often consolidated than other types of loans. To consolidate your federal loan, you can log on to and follow their directions until you hit your information. You should remember, before undergoing the loan repayment process, that you are performing a financial operation that is, for all intents and purposes, irreversible. Once you consolidate your loans into one line of debt, you are essentially erasing the other line(s), meaning there’s no “undo” button on this. Make sure, beyond all shadow of doubt, that this is the step you want to take before you proceed to physically take the action.

After you consolidate your loans, you’ll have a period of time to get your personal finances in order, usually around two months but dependent on your loan program, before the first period of repayment begins. By combining all your payments onto one bill, you eliminate the middleman of having to pay off multiple receipts and make your life easier. There are always other factors to consider when going down this road, but usually, consolidating loans is a step in the right direction in terms of basic organization.