I just graduated and am beginning to repay my numerous student loans. I have no idea where to begin with tracking them all down and I’ve been told I should consolidate. What would be the benefit in consolidating and how do I sort through these numerous student loans?
“Having gone through it myself, I understand how difficult it can be to track down all of your loans after school,” said FPA member Robert Schmansky. “To start your search for all of your loans, the call your school’s financial aid office or check your free credit report from the three credit bureaus at www.annualcreditreport.com (you can request a free copy from each bureau annually, which is a good habit to get into). These options would tell you information on federal and private loans in your name or if you had a school provided loans.”
“If you only had federal loans, there are several places you can look for information:
- The National Student Loan Data System (NSLDS): You will need to know your PIN from the US Department of Education.
- The Federal Student Aid Information Center: (800) 433-3243.
- The National Student Clearinghouse (NSC)
“On consolidation: If you can afford the payments, consolidation isn’t going to help you financially. If you are having trouble with payments, consolidation may offer more repayment options, but there may also be downsides to consolidating.
“On the government loans: In the past when federal student loans were issued with variable rates, it made sense to consolidate and lock-in a fixed rate. Now, federal loans are fixed rates for life, and when consolidated they are combined at a weighted average of the rates of the loans. So, there is no benefit from a rate perspective to consolidating.
“You should also look at the benefits of the loans you have (such as interest rate discounts) before consolidating. Read the Federal Student Aid checklist of items to consider before consolidating loans.
“If you have private loans, you are going to have a hard time finding a lender to consolidate loans. Talk to your current lender about repayment options, including deferment options, if you anticipate problems with making payments.”