Things You'll Need:
- principle amounts on your 2+ loans
- interest rates on your 2+ loans
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Step 1
Firstly, you need to have two loans to consolidate them into one. Most people consolidate to try to get a better deal and so that they can only make one payment to one institution.
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Step 2
For example, if you have a loan with a high adjustable interest rate, and your credit score is going down the drain - consolidation might be good for you as your interest rate will probably increase with a lower credit score.
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Step 3
In most cases, your new loan will be a weighted average of the two loans, so it might seem like a good idea to consolidate if you have $1,000 at 6% and $12,000 at 12%. Remember that is it weighted and will probably turn out to be an interested rate that is much closer to 12% than to 6%. My weighted average interest rate keeps turning out to be 6.5% even though one of my loans is at 6.5% and one is at 6.25% and they have approximately the same balances. It looks like consolidation would not work for my case, but it could for yours as each one of us has unique loan details.
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Step 4
To approximate the changes that could be made to both of your loans, you can consult the calculators on these two websites: http://www.edamerica.net/planforcollege/studentloancalculators/consolidationcalculator and http://www.finaid.org/calculators/loanconsolidation.phtml
Comments
taralynnebrown said
on 10/28/2009 This is a great resource with so many Americans faced with student loan debt.
abejareina1989 said
on 10/14/2009 Nice one!
christinematz said
on 10/13/2009 Great article! 5*
survivoryea said
on 10/12/2009 Very good information on consolidating student loans! 5*
gitarwmn said
on 10/12/2009 I did this after college and it made life much easier. Good article.