Great Lakes Higher Education, commonly called MyGreatLakes, is one of the largest servicers of federal student loans. Though Great Lakes does not directly provide consolidation or refinancing services, it is still possible to refinance loans with Great Lakes. The big question for borrowers to decide is whether or not this financial move is a good idea.
Getting a Lower Interest Rate from Great Lakes
Even though Great Lakes in not able to lower interest rates on their loans, borrowers are able to refinance with another lender to secure a lower interest rate. By locking in a lower interest rate, repayment time can be shortened, monthly payments can be lowered, and total spending can be reduced. There are many student loan refinance and consolidation companies currently in the market. At present the best refinance rates start at just over 2.5%
Going this route means the loan would no longer be owned or serviced by Great Lakes and the terms of the new loan would depend entirely upon the new loan contract.
Consolidating a Great Lakes Loan
Consolidation takes place when numerous loans are combined into one single new loan. In many ways refinancing and consolidating are a very similar process.
However, in the context of student loans, consolidation often refers to the Federal Direct Student Loan Consolidation process. Federal direct consolidation doesn’t lower interest rates, but it can be used to convert loans that were not previously eligible for certain forgives programs or repayment plans into eligible loans. For certain borrowers this process is a must. For others, it is a mistake. If you think consolidation might be a good idea, reach out to Great Lakes to discuss how consolidation will affect your loans and program eligibility.
Refinancing vs Consolidation
Because refinancing and consolidation are often used interchangeably, it can be hard to keep track of the differences. Rather than trying to define financial terms, it probably makes more sense to compare Federal Consolidation to Private Refinancing.
Federal Consolidation – Great Lakes does not directly provide this service, but it can be done to all federal loans. The strategy behind federal consolidation is to get your federal loans eligible for the federal programs you desire. Note: all federal consolidation takes place directly through the Department of Education. For more details on the process, the Federal Student Aid page has a nice breakdown.
Private Refinancing – Private refinancing takes place when a private lender pays off some or all of your federal loans. At that point, the borrower is responsible to pay back the new lender per the terms of a new agreement. The idea behind this process is all about getting newer better terms. The risk behind the process is that federal perks such as income-driven repayment plans and student loan forgiveness are no longer an option. Be sure to check out our student loan refinancing page for a full list of lenders as well as some tips on getting the best deal.
The Consolidation and Refinancing Process
If it is time to refinance or consolidate your Great Lakes federal student loans, Great Lakes is largely an uninvolved observer.
Federal consolidation is handled by the Department of Education. Great Lakes really doesn’t have a role in the process. Just make sure that you stay up to date on payments prior to things getting started.
In private refinancing, the new lender does all of the heavy lifting. You may have to send a recent Great Lakes statement over to the new lender, but the refinance company will be responsible for cutting the check and getting it to Great Lakes. Once your Great Lakes loans are paid off, you can begin repayment with the new company under the terms of the new agreement.