My Personal Experience with Consolidating Student Loans

As a graduate of college with not one but two different degrees, I have managed to rack up some student loan debt. Because I attended a few different colleges to obtain my degrees, my student loans are not held by one lender but by three different ones. My first thought upon graduation was to just pay all the loans through each of the separate companies.

I quickly found out that this probably wasn't the best method. Two of the loans were held through Government agencies so they had relatively low interest rates and were more than willing to work with me on affordable re-payment plans. The third set and the largest of the loans was held through Citibank. While they were willing to put them into an extended repayment plan, the interest rate was much higher than the Government agencies were giving me. On top of that, it was a lot harder to set up an online repayment plan and then I received a letter that while I was in the extended repayment plan, I would have to go through a re-validation process in a few years to see if I still qualified for an extended repayment plan or if I would have to start paying them back faster. On top of the multiple interest rates, it did start getting confusing on which loan was due when since they all had different due dates throughout the month.

Eventually it reached a point where I decided that my best option would be to consolidate the loans. I had a few different options to look at; consolidate through a separate company, consolidate through one of the Government agencies holding my loans or consolidate through Citibank. I quickly decided against consolidating through a separate company. While I'm sure there are some good companies out there, I just could not find a company with good reviews to entrust them with not only my personal information but my bank information as well. The next option that I explored was consolidating through Citibank. Even though they had the highest interest rate, I really looked at going down this route since they did hold the largest of my student loans. But as I started the process, I was informed that they were not taking applications for consolidating any student loans through their services. My finally option at this point was to look at the Government Agencies that hold my loans.

I quickly ruled out PHEAA; the state agency that was holding them; since I have a very small loan through them. While they are great to work with and have an easy to navigate web site and payment service, they really weren't my best option. The first reason I already mentioned, I had a very small loan through them; the second reason was because I was looking at attending graduate school and my chances of taking another loan out through them was slim. This left Direct Loans - the Federal lender who held my second largest loans. Like PHEAA, they had a site that was easy to navigate and an easy to use navigation system. Another plus was lower interest rates.

The hardest part of the process was gathering all the loan information together since Citibank had broken my loans out into twenty-three different loans ranging in amounts from $500 to $5000 all with different account numbers. So while I paid one lump sum to one loan number, as I started to gather them, I found I had twenty-three different account number to work with. But once that was done, the process through direct loans was simple and the best part was I could complete the application entirely online. In the end, while my monthly payment went up some, I had a lower interest rate, one set date to repay all my loans and in the long run, I would be paying back less money.

My advice to anyone considering consolidation is to weigh out your different options and look at different scenarios and different plans. What works for one person may not work for another. Also, do your research. Don't just sign up with a company just because they say they can get you a good deal. Research the company and make sure they're not only a legit company but that they follow through with what they say they're going to do.