Poor Credit Student Loans | A Few Student Loan Consolidation Rules

A Few Student Loan Consolidation Rules

If you’re looking into student loan consolidation, you’re certainly not alone.  These days, the majority of college graduates with loans end up consolidating them into one loan.  The main reasons for this are simple:  the convenience of making one payment to one lender, instead of many payments to various lending sources, and a monthly payment that is sometimes less than half of what was required before consolidation.  There are, of course, other reasons, but regardless of why you’ve decided to look into consolidating your student loans, there are a few student loan consolidation rules you should be aware of before you get started on the application process.
The first rule, and most important of all the student loan consolidation rules, is that not every loan is eligible for consolidation.  There are certain criteria that must be met.
Two general student loan consolidation rules are that you must currently be making payments on the loans you want to consolidate, or they must be in the grace period.  You cannot consolidate loans that are past due, or that you have defaulted on.  Also, you can no longer be a student, or if you are attending school it must be on a less than part-time basis.
While these two student loan consolidation rules may be easy to meet and determine, the third might not be so simple.  The third rule is that not all loans are eligible for consolidation.  For example, federal consolidation will cover only those student loans that are federally backed.  These types of loans include the Federal Stafford Loan (subsidized and unsubsidized), Federal Perkins Loan, the Federal Supplemental Loan for Students – also called SLS – and the Federal Parent Loans for Undergraduate Students – also referred to as PLUS.
Also, many lending companies have their own set of student loan consolidation rules.  For example, many loan agencies require a minimum balance, often $5000 but sometimes more, and some private lending companies have strict loan terms.  Also, interest rates may vary, and while half a percent difference might not seem like much to you now, over the term of your loan (often 30 years) it could end up costing you thousands of dollars.  When dealing with student loan consolidation rules, it is best to understand the types of loans you have, and thoroughly research any lending company and the terms they are offering.

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