The total student loan debt outstanding in the United States of America has reached by mid-2019, a historically risen peak. More than 44 million Americans have student loans, with an average student loan debt per borrower of 30.000$, with one out of 10 students juggling with more than one study loan, while there is more than 30% student loan delinquency rate.  

Many students and graduates take out multiple loans. Higher education isn’t cheap! If you’re in this category, you’ve probably considered combining all those loans into one simple loan, a common process also known as either student loan consolidation.

Consolidation is the process of combining several federal student loans into one consolidation loan that retains all the benefits of federal loans: flexible repayment options if you lose your job or go back to school and forgiveness programs after years of service in certain qualifying fields.

How does consolidation work? You take out a new loan, which then pays the balance on all your federal loans, even if they have different services (such as NelNet or Navient) — the companies to which you send your payments. You’re then responsible for paying off the new balance, known as a Direct Consolidation Loan, from a single lender. Loans combined into a Direct Consolidation Loan can’t be removed.

Fewer payments every month may sound like a no-brainer, but consolidation’s not best for everyone. Do you meet the conditions below? If so, you may want to consolidate.

In order to get the best student loan consolidation perspective, count on these 6 recommendations:

  1.     You have to be eligible

You are not attending school at the moment and you are enrolled less than part-time. Your active student loans are not in default; while you are either making loan payments or you have a loan grace period. Your loans are in your name, not in your parent’s or for example, spouse’s name.

  1.     You want to reduce your monthly payments

If short-term savings are your priority, consolidation is worth a look. You can lower your monthly payments and increase your repayment period.

Lower monthly amounts, though, mean you pay more over the loan’s life. Compare your current monthly payments to what the payments would be if you consolidated. The longer your repayment period is, the more interest you’ll pay.

  1.     Your individual loans don’t offer flexible repayment options

Make sure you know the borrower benefits of your original loan before you consolidate. These include rebates, loan cancellation benefits, and interest rate discounts. Once the original loan disappears, you lose those benefits.

Loan consolidation may offer just the wiggle room you need, however, if your original loans are more rigid. The best student loan consolidation payback plans can include the following options:

  • Extended repayment, where you can have between 12 and 30 years to pay.
  • Graduated repayment, where you begin payments at a low monthly amount that increases gradually every two years.
  • Income-contingent repayment, where you calculate your income and outstanding debt, and your lender sets a repayment amount for you based on the total. As your income changes, this amount changes.
  • Income-sensitive repayment, where your monthly payment is a percentage of your pre-tax monthly income.
  1. Lower interest rates

Variable interest rates can adjust every month, based on the interest rates available at the moment. Initially, these rates may be lower than the interest on fixed-rate loans. If interest rates rise, however, your loan interest will rise accordingly. Same thing if interest rates fall. You’re at the mercy of the market. If you plan to pay off loans quickly when interest rates are low, a variable rate is a good option.

Fixed interest rates stay the same for all the length of the life of the loan. There is a fixed monthly payment each month. First signing on the student loan interest can be a bit higher. A fixed-rate means in time the payment can be less and can save a lot of money if there is a strong credit and if the interest rates don’t rise significantly over the years. In financial terms, for long terms savings, it’s best to lock in a fixed rate when the interest rates are low.

  1.     Improved credit score since accessing the student loan

Lenders love good credit. You can still lower your interest rate through consolidation. This means if you’ve had a jump in your credit rating, you may be in a good position to consolidate private loans. The higher score gets you lower interest and the best student loan consolidation plan is accessed.

  1.     Anticipating a change in income and expenses wide

If the financial circumstances are changing, it is an opportunity to adapt the loan repayment matching the actual scenario.

Consolidation also restarts the clock on deferments and forbearances, giving you extra time for each.