Borrowers should have loan account numbers, estimated payoff dates and contact information for each of their loans’ holders ready.
Betsy Mayotte, director of regulatory compliance for the student debt assistance group, American Student Assistance, makes sure to tell borrowers to stay away from consolidation loans that combine federal and private loans.
Consolidating both types of loans excludes borrowers from federal protections.
Loan consolidation is when a borrower takes out a new loan to pay off several smaller student loans.
Instead of making multiple payments to multiple lenders, the borrower only has to pay off the new consolidation loan, says Michelle Pezzulli, vice president of operations for Credit Union Student Choice, a student lending service provider in Washington, D. “That new loan will have its own interest rate; it will have its own repayment terms; it will have its own terms and conditions,” she says.
The difference is you’ll need to apply through a private lender.