How to do College Loan Consolidation

College loan consolidation is a relatively simple process that may save you money and improve your credit at the same time. By consolidating your student loans, you can free up more of your monthly income to pay off extra principal each month. Consolidating these loans will also improve your credit score.

Instructions

College Loan Consolidation

1. Learn the basic requirements for consolidating your student loan debt. You must have at least $20,000 in federal loans for federal loan consolidation. These must all be in your name; you can no longer consolidate loans with a spouse. Private loans can not be consolidated under federal consolidation; those are separate.

2. Consider your current enrollment status. You can not be in school more than half-time for loans you are consolidating. If your current enrollment is not paid for by loans you're consolidating, you're fine.

3. Don't worry about your income, as current employment is not necessary to qualify for consolidation. You don't need collateral or a co-signor, either.

4. Check current student loan consolidation interest rates and compare them to the rates you are currently paying. If there is a large discrepancy between them, this may affect your decision. After all, student loans at 2 percent interest are better than a consolidated loan at 6 percent.

5. Apply online at a banking institution that is part of the Family Federal Education Loan Program (FFELP) or otherwise authorized to consolidate student debt. Most debt consolidating services are through private banking institutions.

Tips & Warnings

• The best time to consolidate your college loans is during the grace period following graduation, when you can lock in the lowest rates.

• A consolidated loan can be put in deferment while you return to school.

• Consider private loan consolidation if you find you don't qualify for a federal loan consolidation.