The Best Student Loan Consolidation Programs That Help You Stay Debt Free

About 4.4 million Americans own student debts and face difficulties while paying them back. Multiple payments per month and high-interest rates are the main challenges that create problems for students. If you are a student struggling to pay off your loan, you can get the best student loan consolidation to ease your life. Student loan consolidation helps borrowers to combine their multiple loans into one single manageable form. The marketplace for student loans has changed dramatically. Nowadays, many banks and lenders handle student loans. Citizens Bank student loan consolidation is one of the proven approaches for student debts. 

There are several reasons people prefer consolidation. One of them is about saving money. If you manage to consolidate your loans with a low-interest rate, you will successfully erase them. In case of a lower interest rate, you can even save money in the end. The second reason is about simplification of the payment process. It is hard for many borrowers to keep track of multiple payments in a single month. With the help of consolidation, you simplify your life and make only one payment per month. Depending on your consolidation way, you could have an even less monthly payment. 

You should consider several important factors while consolidating your student loans. The first one is the interest rate. Try to consolidate your student loan at a lower price. Never go with a high-interest rate. The other thing is about additional fees. Some lenders charge borrowers with extra hidden payments. You should remember that while choosing a lender. Also, lenders should provide you some level of flexibility when unexpected job loss happens. Finally, the lender should be trustworthy and offer excellent customer service. They should be available whenever you have questions or problems. 

Two types of the best student loan consolidation

Generally, students may benefit from two different types of student loan consolidations. The first one is federal student loan consolidation, and the second one is private student loan consolidation. People call private student loan consolidation as refinancing. Using the best student loan consolidation, you could consolidate different types of federal loans. However, consolidating private student loans will not be possible. But using refinancing, you will manage to refinance both private and federal loans. 

Both the best student loan consolidation and refinancing have advantages and disadvantages. For example, you cannot lower the rates while applying for consolidation. However, with the help of refinancing, students benefit from both fixed rates and variable rates. Loan consolidation helps borrowers to lower the monthly payments by making them a single payment per month. Using loan consolidation, you cannot save money. However, students who prefer refinancing their debts usually manage to save money in the long run. But the main disadvantage of refinancing is that you lose all the benefits of federal student loan programs. For example, if you choose to refinance your debts, you will no longer benefit from different repayment options or forgiveness programs. Yet, students can be eligible for forgiveness programs or repayment options even though they consolidate their student loans. In both refinancing and consolidation, you make one monthly payment. 

What is the federal student loan consolidation?

It is the consolidation type that does not require any credit history from borrowers. With the help of federal student loan consolidation, you could lower your monthly payments and get a single loan bill. You can consider applying for federal student loan consolidation in several cases. Firstly, if you want to try the best student loan consolidation to become eligible for public service loan forgiveness or income-driven repayment, you can apply for it. In other words, if you have Perkins, Federal Family Education, or PLUS loan, you might be eligible for federal loan consolidation. Secondly, this type of loan consolidation is the best fit for students who want a single monthly payment and do not need to lower the amount of debt. 

When you become eligible for federal loan consolidation, the government replaces your loan with a direct investment. Consolidating for loans through the Department of Education does not require additional purchase from you. Once you qualify for the best student loan consolidation, the rate becomes the average of your previous interest rates. Also, you gain a new loan term, which will be between 10 and 30 years. And the repayment period will start within the 60 days after you consolidate your student loans. 

How to consolidate federal student loans?

To become eligible for the best student loan consolidation for federal loans, you need to sign in to studentloans.gov. Then enter “Complete Consolidation Application and Promissory Note.” You should finish the application section. Then check what documents you need to collect from “What do I need?” part. While filling out the application, you will need to provide which loans you want to consolidate and which ones do not. Then you will select your repayment plan. The timeline could depend on your loan balance or your income. If you choose the income-driven repayment plan, the next step will be about filling out the income-driven repayment plan request. Do not forget to read the terms before submitting your application online. And also, do not stop paying your monthly payments until you become eligible for the best student loan consolidation. 

Citizens Bank student loan consolidation

Citizens Bank has gained an excellent reputation because of its student loan refinance and consolidation services. It has many branches that let you visit the bank and share concerns about your student loans. The most advantageous part of working with this company is the interest rate. They offer a lower price when compared to other banks. The company is famous because of its low-interest rates and customer care services. Borrowers do not face any difficulties during the pre and after the loan application procedure. Therefore, Citizens Bank is among the largest banks for student loan consolidation services.

The bank has been operating since 1828. It makes the company be one of the oldest lenders. However, Citizens Bank student loan consolidation services started working in 2014. Today the company offers newer products for students in the consolidation industry. Interest rates vary depending on the degree. For example, undergraduate students can get loans with 6.45 APR, which is more expensive than others. The bank provides loans for non-graduates as well, and it is not an ordinary thing for private student loan consolidation. 

Difference between refinancing and consolidating

best student loan consolidationMany think that refinancing and consolidating terms have the same meaning. However, they are different concepts. As we have mentioned earlier, consolidation is about paying one monthly payment instead of multiple ones. In other words, consolidating your student loans is about making them more manageable and straightforward payment. Student loan consolidation will be beneficial if you have credits from government programs. It is also possible to consolidate private loans, yet the main benefits are for government loans. Debt consolidation programs often confuse many students. Usually, credit counseling or similar agencies offer services related to debt consolidation. These agencies negotiate with creditors to make more affordable payments for you. You become responsible only for a single payment, and that payment goes to the agency. Then your agency pays your loans. 

On the other hand, refinancing replace your loan or loans with a new loan. The main aim of refinancing is to make the interest rate lower. As a result, you manage to reduce monthly payments and interest costs. While refinancing your student loans, you could also consolidate them. When we talk about refinancing your student debt, we mean the optimization of your investment to help you pay less. Both private and federal student loans benefit from refinancing. 

Consolidation vs. refinancing: which one is the right option for you?

Should you choose to consolidate your student loan and refinance them. The decision is essential for each student because it could help you to save thousands of dollars in the end. Although Citizens Bank student loan consolidation is a great way to eliminate your loans, it is not always helpful. While consolidating your student debt, you should be cautious. Usually, students tend to consolidate their student loans and extend the duration of payment. It helps to reduce the monthly payment, yet in the end, you end up having a higher interest rate. At the same time, debt consolidation loans might prevent you from having several borrowers benefits. Some of these benefits include loan cancellation, interest rate discounts, or principal rebates. 

Most students do not consider refinancing solutions for their student loans. Yet if you refinance your student debts, you might end up saving thousands of dollars. Note that you can refinance your student loans more than once. It is most beneficial if you have student loans with high-interest rates. With a good credit history and a steady income, you could lower the interest rate. Student debt refinancing is not the same for all borrowers. Lenders create a refinancing method based on your income, comfort level, financial status, and beyond. 

The repayment period for consolidation and refinancing

The repayment period of the best student loan consolidation for federal loans is ten years. However, the term can change based on the repayment strategy. For example, you could increase that period to 20 or 30 years if you own income-driven plans, including PAYE and REPAYE plans. 

In the case of student loan refinancing, the term could vary based on the lender. Some lenders allow students to pay their debt within five, seven, fifteen, ten, or twenty years. It also depends on your repayment preferences. If you would like to pay off your student loan quickly, you could choose a shorter term. Yet, if you want to pay off your debt within a more time, then you need to go for a long term repayment plan. Both short and long terms have pros and cons. With the short repayment plan, students get a lower interest rate but more monthly payments. But the advantage is that you erase your debt in a short time. Yet, the extended repayment term provides a higher interest rate but a lower monthly payment. As a result, you pay off your debt slower. 

Can you consolidate after refinancing?

refinancingAnother essential question most students ask is whether they could benefit from both the best student loan consolidation and refinancing. Yes, it is possible to consolidate and refinance your student loans at the same time. If you already have consolidated loans, you can quickly refinance them. It will not require additional fees or hidden purchases from you. There will be no prepayment penalty, as well. The best part about refinancing is that it does not apply any limitation on how often you should refinance your debts. 

Simplify student debt obligations with consolidation

Student loan consolidation helps you to combine several loans into one payment. Depending on the rates of debts you want to consolidate, you could get a different interest rate. The process simplifies the payment process. However, it does not necessarily reduce student loan payments. If you choose a private lender to consolidate your student loans, then you might be eligible for a low-interest rate. In addition to this, you can manage to combine loans into one simplified monthly payment. It is also possible to consolidate both federal and private student debts into one new loan. But to do so, you should be ready to exchange the several benefits of federal student loans. 

Reduce payments by refinancing student loans

With the help of refinancing, you can extend the payment period and lower the interest rate of your student loans. It will make the monthly payments manageable and help you to pay off your loans faster. As a result, the borrower will improve the credit score. Let’s imagine you have a student loan, which you are closer to pay off. Refinancing that loan could help you to adjust this loan individually. At the same time, you can continue your other regular payments or consolidate them into one loan. If you want to lower the debt-to-income ratio to collect money, then the refinancing option will help you to achieve your goals. 

We could mention other factors for students who want to refinance their loans, especially federal student loans. These loans contain huge repayment benefits for borrowers. Even if you apply for the best student loan consolidation, you will end up losing those benefits. In that case, we do not recommend you to refinance or consolidate federal student loans. Instead, you could refinance your private loans and leave the federal one as usual. In that case, you will manage to benefit from income-based repayment plan or other federal student loan forgiveness programs. 

Refinance with a lower variable rate or a fixed rate

Interest rates can vary depending on the credit score. On the other hand, your received variable price could be lower than your current loans’ price. But the variable rate might be different each month. If your rate increases, then your monthly payment will also increase. 

If the student loans have a variable rate, then your payments per month can change depending on the interest rate. In case you apply for refinancing with a fixed rate, you will get consistent payments for each month. Yet, it is more likely that the fixed rate will be higher than the variable one. Therefore, your next monthly repayments will be higher than your current payment. But note that the amount will be fixed and will not change for each month. 

Applying for refinancing your loans may help you to reduce monthly student loan payments. And you will also gain control over your finances. If you want to maximize your advantage from refinancing, you could benefit from longer payment terms and lower interest rates. 

Quick Summary: consolidation or refinancing 

We want to add a quick summary of the best student loan consolidation and refinancing to help you. The federal loan consolidation or direct loan consolidation is an organization tool. It indicates that you will get a higher interest rate. Also, it is applicable only for federal student loans. Federal student loans include Direct Loans, Subsidized Stafford loans, Federal Direct PLUS loans, Federal Family Education Loans (FFEL), Direct Consolidation loans, Direct Unsubsidized Stafford loans, etc. If you want to refinance, you should remember that this process offers you a lower interest rate and more flexibility. Also, in the end, you could save money. It is also the best choice if you want to pay off your debt quickly. 

Deciding on the best student loan consolidation method is challenging for most students. If you cannot find where you should begin, our experienced financial experts at Student Loan Resolved are here to help you.