Federal Student Loan Consolidation: FAQ Part 3

More answers to common questions on federal student loan consolidation as help for affording college:

1. How long does federal student loan consolidation take?
Federal student loan consolidation can take up to 90 days to complete, and in rare cases even longer. Retrieving payoff statements from your lenders is what takes the longest amount of time.

2. What should I do if I am not eligible to consolidate?
If you are not eligible for a federal student loan consolidation, some other options you could consider are private loan consolidation, or attaining a personal line of credit from your bank or credit union.

You could also consider refinancing a home or investment property to pay off the loan. If you have consolidated your student loans in the past and at high rates, this option will give you tax benefits and will also be cheaper than the interest rates that you are paying right now.

3. Can I forbear or defer?
Yes, you can. One of the good benefits of federal student loan consolidation is that you are able to keep all of your federal borrowing privileges. They include:

-Forbearance of your consolidation; up to 36 months

-Deferment of consolidation payments, should you return to school

-Forgiveness of entire loan, should you pass away.

4. How do I defer?
Once you consolidate your student loans, you will receive paperwork listing your payment schedule. At this time, you are able to request a forbearance or deferment form.

5. Again, why should I consolidate my federal student loans?
Federal student loan consolidation is an excellent option if you want to increase your monthly cash flow. By consolidating, you are able to extend your repayment period and possibly get more discounts on your current interest rates, which will reduce your monthly payments in result.

The best time to consolidate your federal student loans is right after graduation before your grace period ends. Doing so at this time will allow you to get the lowest possible fixed interest rate on your loans.

6. How long will my repayment period be?
Your repayment period will depend on the total amount of your federal student consolidation loan. If your student loan balance is $30,000 to $39,999, you will have a repayment period of 20 years. You will have a repayment of 25 years for a balance of $40,000 to $59,999.99, and a period of 30 years for a balance of $60,000 and above.