Congratulations on your graduation from Ferris State University!
Now that you have graduated, you may be thinking of consolidating or refinancing your loans. Consolidation is a process in which you take multiple loans and refinance them into one new loan with one payment. Here are some things to consider before you decide to consolidate:
Generally speaking, consolidation lowers your standard monthly payment by combining all loans into one balance with one interest rate. Since you are paying less upfront, you will likely incur more interest and pay a higher total amount in the long run once your loan is paid in full.
The Department of Education offers consolidation of loans you received through FAFSA (subsidized, unsubsidized & Perkins). To determine if consolidation is right for you and to apply for consolidation you may go to studentaid.gov and click on the In Repayment link. For answers to common questions click here. You may also talk with your loan servicer and use a repayment estimator on their website.
It is typically not a good idea to consolidate Federal Direct and/or Perkins loans into a private loan. Federal loans have repayment benefits such as forbearance, income-based repayment and forgiveness options that very few private lenders offer. It may be better to keep your federal loans separate and refinance only your private loans.
- Make sure that you are dealing with a reputable source. There are many private finance companies that offer to help refinance student loans and they appear to be either federal agencies or authorized by President Obama. The claims from these companies are that they can help you qualify for lower payments and in some cases loan forgiveness under new federal programs. Many of these sites are scams that charge fees for services that offered for free by your current federal loan servicer.
Make sure the interest rates and any fees being charged for the consolidation are comparable or better than the terms of the loans you are refinancing. Example - it would not be an advantage to consolidate loans that have a 6% interest rate into a new loan with a 10% interest rate.
We have compiled a list of reputable consolidation loan sources that you may wish to consult with questions about consolidation.