As the student debt problem in the US continues to grow, more and more companies are offering “help” with student loans. What they don’t tell you is that the “services” they are offering are all things you can do for free.
If you follow these simple steps you can consolidate your government loans and lower your payments quickly, easily, and for free.
Step #1: Track down your federal student loans.
The department of education has a website, that will provide a list of all of your federal government loans. Simply follow this link, and click on the tab for financial aid review. Once you enter your information, the department of education will provide a list of all of your federal loans. Print out this information or bookmark it for your reference.
Step #2: Decide if you want to consolidate your loans.
If you are not sure what consolidation is, or whether or not you should do it, be sure to check out our page on student loan consolidation. Its important to remember that there is no “undo” when it comes to consolidation, once it is finalized it is permanent.
Step #3: Apply for Federal Consolidation.
The department of education has also created a website specifically for apply for loan consolidation. Though it is an “application”, there is no risk of being denied because of low income or bad credit. In fact, you can even consolidate defaulted federal loans.
To submit you application, simply go to the federal government loan consolidation page. Sign in using your federal PIN and your application is started. Completing this application isn’t exactly fun, but it is probably most similar to filling out your FAFSA. It is not a perfect process, it can be tedious, but its designed so that anybody can do it.
Step #4: (Optional) Sign up for an income based repayment plan.
One of the nice parts about applying for loan consolidation is that you can sign up for an income based repayment plan at the same time. Normally this is a process that you have to do directly with your lender, but in this case you only need to submit a bit more information.
The nice thing about the income based repayment plans is that it doesn’t matter how much or how little you make. As long as you pay a portion of your income, and that portion could be as low as zero, you can keep your loans in good standing.
Step #5: Hurry up and wait.
Processing your application will take some time. It could be up to 3 months. If your lenders are hassling you, let them know that you just filed the loan consolidation paperwork and they will usually give you a deferment until the application is processed.
Just before your loans are actually consolidated, you will get a letter in the mail explaining that your loans are days away from being consolidated. This will be your last chance to cancel the consolidation. If you signed up for IBR, you will also be getting a letter notifying you of your new monthly payments.
Step #5: Pat yourself on the back.
Getting student loans under control can be a struggle, but be glad you took the time to do it yourself and saved a ton of money.