Student Loan Consolidation Info

When to Consolidate

When to Consolidate Student Loans

There are no specific dates or deadlines to keep in mind while considering when to consolidate student loans, since it depends on when you leave school. The most important thing to remember about consolidation is to apply as quickly as possible when you enter your grace period or approved term of deferment. If you allow these times to elapse before consolidating, your average weighted fixed interest rates will be calculated using the higher out of school rate, which means that you spend more money per month on interest than you would if you had consolidated during your grace period, which would have fixed your grace period rate. Raise your hands....who wants to give away your money?

It is important to understand the grace period of your loan while deciding when to consolidate student loans. For federal student loans, the grace period begins as soon as the borrower graduates or drops out of school and ends when the loan enters the repayment phase. It is usually a period of about six months, depending on your lender (but some federal loans, such as the PLUS loan, have no grace period).

Consolidating during your grace period not only can lower your monthly interest rate by as much as 60%, but it allows you, the student borrower, to find employment and get on steady footing. So, when should you consolidate student loans? During your grace period, without a doubt! If you consolidate at this point in time, you will find that your life is simplified even more since you will only be paying one monthly bill to one lender, rather than several monthly bills (with different and variable interest rates) to multiple lenders.

If you are going to submit the application for consolidation, make sure to file soon after you enter the grace period. It takes at least six weeks to process applications and to proceed with the consolidation of your loans. Thus, you want to consolidate as soon as possible to ensure that you get the best possible interest rate on your consolidated loan.

Of course, another thing to consider while figuring out when to consolidate student loans is that consolidation before the end of a grace period means you waive the grace period on all those loans. You may be able to defer payment of your consolidated loan until the end of your former grace period, but the original grace periods will be scrapped along with the original loans.