If you are managing multiple federal or private student loans, then you may want to consider consolidating your student loan debt. Many people have benefitted from consolidating their loans, because consolidation combines all your student loan payments into one, and in most cases, it reduces the amount of your total monthly payment. As with any loan, it is important to understand the details and terms of student loan consolidation, so you can make the best choice for your specific financial situation.
Discover is a reputable company who offers consolidation options for federal and private student loans, including loans with fixed or variable interest rates. The fixed interest rate depends on the loan term. A 10-year loan term will have an annual percentage rate (APR) between 5.24% and 8.24%, while a 20-year loan term will have an APR between 5.49% and 8.24%. Variable APR’s will range from 3.87% to 7.12%.
There are no loan fees or consolidation charges with a Discover student loan consolidation. To qualify for this loan, you must be a U.S citizen or permanent resident and have less than $150,000 in student loan debt. The minimum consolidation loan amount is $5,000. The lender will verify your income and credit history to determine if you will be approved for the consolidation loan.
What Loans Can I Consolidate?
Discover allows you to consolidate virtually any federal and/or private student loan, although there are some exceptions. Post-graduate loans, such as bar exam or residency loans, cannot be included, nor can loans taken out during part-time enrollment. In addition, any loan that originate outside the United States cannot be consolidated.
Applying for Consolidation
The application process is easy, although it may take up to 45 days to receive a response. Your credit score will affect the interest rate, so if you have bad or poor credit, this may not be your best option. If you have a significant income, this can help reduce your interest rate even if you have a low credit score. You may also choose to use a co-signer, which can reduce your interest rate as well.
Evaluate Your Finances
The only way to determine if you are getting a good deal on your consolidation is to understand your current financial situation. You should know what your debts are, whether they are federal or private, and the associated interest rates. Only then can you compare the consolidation options that will most benefit your situation.