Struggling with an outstanding amount of student loans is not so easy as it sounds. The US Federal Reserve reports that the total size of student loan debt has been $1.6 billion by 2019. Besides that, there are 49 million borrowers who have taken student loan currently. On the other hand, according to the last statistic reports, more than 38% of these borrowers have been confronting with the risk of going into default. Especially, when you are dealing with a number of credits ( including both federal and private student loans), overcoming to make payments seems quite challengeable. That is why sometimes the best way would be to combine multiple private student loans under the unit of federal loans which require more flexible conditions. In this post, we are going to look at the ways of how to convert Sallie Mae and Navient private loans into a federal loan.
About Navient and Sallie Mae student loans
Sallie Mae was created in the 1970s, and since its establishment, it has been offering and providing student credits in the purpose of helping students to get higher education service. Even though Sallie Mae was functioning by depending on government funding, it is an entirely private company. It means that they provide only private student loans. It is essential to take into account this consideration because the requirements and conditions of federal and private student loans are ultimately different and unique. By the way it worth to note that Sallie Mae was providing student loan consolidation and refinancing service up until 2008. But, after this period, since now, it functions only as private loan servicer which only offers private loans for k-12 schools, training for a career, and colleges.
On the other hand, Navient still maintains its position as one of the most important and the most significant student loan servicer in the whole US (among the others- Nelnet, Great Lakes, FedLoan). Navient is still providing both private and federal student credits for all types of education service including college, schools, and career training programs. But eligibility requirements and conditions are much more flexible and elastic in compare with Sallie Mae.
Is it possible to convert private loans into a federal loan?
First of all, it worth to note that before starting to apply for any change, the first and forefront thing is to check out your student loan status. You have to determine what kind of student loan you have currently. Is it a federal or private student loan? To check the status of your credit, it is recommended to use the Department of Education’s Federal Student Loan Database. If you can see your credit on this database, then it means that your credit is a federal student loan. In opposite, if you could not find your loan on this base, it means you have a private student loan.
After you find out the status of your student loan, now here it comes to the exciting part. Could you convert private loans into a federal loan? Unfortunately, the direct answer is no. But, even though the US Department of Education does not allow to transform a private student loan into a federal loan, it doesn’t mean that you don’t have other alternatives to tackle down with your multiple loan debts. Especially, if you have borrowed money through a couple of lenders, then you have several options that allow you to get rid of your debts with a smaller amount of monthly payments.
How to get rid of outstanding loan debts?
As we mentioned earlier, a student loan is divided into two categories based on the source of funding: private and federal student loans if you have several federal student loans, there two alternatives to lessen your debt burden.
The first option is to consolidate multiple federal student loans. Loan consolidation allows you to combine a couple of federal credit into the unit and only loan. Besides that, it provides additional advantages such as reduced monthly payments with lower interest rates. Due to the interest rates is calculated as the weighted-average method, you have options to choose fixed or adjustable interest rates. However, it is better to keep in mind that when you consolidate your student loans, due to that expands the overall length of the repayment period, the total costs of your credit will be more than the original worth.
Another alternative to handle federal loans is applying for student loan refinancing. One of the main difference of refinancing from loan consolidation is that it is available for both federal and private student loans. If you have a couple of federal student loans, by refinancing them you will get lower monthly payments and reduced interest rates, Besides all of these, you don’t have to deal with several lenders, waste your time with tons of paperwork, or annoying legal procedures. On the other hand, it would be better to remind that by refinancing of your federal student loans, you are going to lose your chance of being eligible for student loan forgiveness programs, protection such as income-based repayment plans. That is why it is recommended to think in-depth and analyze all the possible outcomes before changing anything.
How to deal with private loans?
Even though the regulations and opportunities of private student loan are fewer in comparison with federal student credits, still there is some alternative that might be in favor of your credit history and status. As we mentioned earlier, student loan refinancing is available for private loans either. To refinance your private loans, all you are going to do is make a new agreement with your private lender. After negotiation of new terms and conditions related to a new repayment plan and interest rates, you can start to make reduced payments and lowered fix or adjustable interest rates. However, requirements of being qualify for refinancing may vary by depending on the lender. Sometime, they may demand a certain level of income or co-signer.
One of the other options to handle with your private loan debts is student loan forbearance. Forbearance allows the borrowers to give a pause on making payments on their debt. Thus, if you have an undue financial hardship and you find it challenging to repay your debts, you can give a break paying your debts through forbearance. But there is also one more thing you should keep in mind that forbearance does not stop interest rate from accumulating. It means that in the long run, you are going to be charged more than the initial amount of the credit that you borrowed.
All in all, by taking all mentioned into account that clear thing is you need to think twice before making any change of plan about your federal and private student loans. Besides all of these, there is one thing that has been something of an issue. Student loan scam is one of the annoying problems that people face often. It is quite an attractive money trap, and of course, you would not like to fall into it. That is why we highly recommend using only official sources while you apply for any operations related to a student loan. If you have any question, please feel free to call Student Loan Resolved Helpline.