What to Know About Consolidating Student Loans

Get the answers to your questions about student loan consolidation

You will have a lot of important financial decisions to make after getting a job, one of which will be paying down your student loan debt. If you took out multiple student loans in undergraduate or graduate school, they may all have different balances and interest rates. Managing multiple due dates and lenders can seem complicated; however, many graduates consolidate and refinance their student loans in order to simplify monthly payments and potentially qualify for better rates. If you're wondering what you need to know about consolidating student loans, find answers to the questions you have before consolidating in this guide from Citizens Bank.

Questions to ask when considering consolidation

As a borrower, you might have questions about how the consolidation process works. Review the following questions and find what you need to know about consolidating student loans.

What is student loan consolidation?

Student loan consolidation allows borrowers to combine multiple loans into a single, new loan with a new interest rate, repayment options and terms. It's important to keep in mind that there are distinct federal and private options for consolidating student loans. When you consolidate through the federal government program, you can only consolidate federal loans into a new loan with a fixed interest rate, which is determined by averaging your current rates.

When you consolidate privately with the Education Refinance Loan® from Citizens Bank, you can consolidate both federal and private student loans into a new loan with your choice of either a variable or fixed rate. Unlike federal consolidation, the Education Refinance Loan bases the new interest rate off market conditions as well as your creditworthiness, potentially providing a rate lower than your existing loans. Keep in mind if you refinance your federal loans with a private lender, you will no longer be eligible for current and future federal benefits such as eligibility for loan forgiveness programs.

Why do borrowers consolidate student loans?

Many borrowers will refinance and consolidate their student loans in order to get a lower interest rate. If you took out student loans each year of college, it's likely that some rates are higher than others. Plus, if your credit score has improved, you may be eligible for better rates. Consolidating your loans could allow you to receive a new, more competitive rate, reducing the overall amount you'll pay in interest. Other borrowers consolidate their loans to streamline their student loan payments into one monthly payment and eliminate the hassle of keeping track of multiple student loans. When you consolidate your loans, you have only one due date to remember as opposed to several, making it easier to manage your finances.

Do I qualify for student loan consolidation?

There are a few qualifications to meet before you can apply to consolidate student loans at Citizens Bank.

  • If you graduated, you must have made at least three consecutive, on-time monthly payments of both principal and interest.

  • If you have student loans but did not obtain a degree, you must instead have made at least 12 consecutive, on-time monthly payments of principal and interest.

  • If you are applying without a cosigner, you must also show 12 consecutive months of income.

  • You must have a minimum of $10,000 in remaining loans and no more than the following:

    • $90,000 for loans applied to an undergraduate degree.
    • $130,000 (aggregate) for a graduate or doctoral degree.
    • $170,000 (aggregate) for a professional degree (dental, law or medical).

  • You must have a relatively strong credit score to qualify for the most competitive rates.

Consolidating your federal loans through the government will have different borrower requirements. For example, you may need to identify the types of federal loans you have and their repayment statuses. Review the consolidation eligibility criteria on the federal student loan website to learn more.

How do I know if consolidating student loans is right for me?

Before consolidating student loans, it's important to know what benefits you will receive from consolidation. If your credit score or financial situation hasn't changed much since you first applied for loans, you may not see much of a difference in your quoted rates. However, if you have a steady income, have made payments on student loan and other debts, or want to switch from a fixed to variable rate, consolidation may be beneficial for you.

If your primary objective is simplifying monthly payments, consolidation could be a beneficial means to do so even if your financial situation hasn't changed enough for you to qualify for lower rates. Plus, you don't have to consolidate all your loans together – if you would like to keep your federal separate to take advantage of repayment benefits, you have the option to only consolidate private student loans. To see if you may benefit from consolidation, use our Student Loan Refinance Estimator to discover what your new rate and term options may be.

Have other questions?

Speak to a Citizens Bank Education Finance Specialist to decide if private student loan consolidation is right for you, or to learn more about how to consolidate your student loans. We can explain more about the flexible terms, variety of repayment options and competitive interest rates of the Education Finance Loan. Plus, we'll help you determine whether you can improve your student loan situation through consolidation. For more information on what you need to know about consolidating student loans, contact Citizens Bank today.