The process of consolidating student loans is a relatively simple process, but it does take some time and effort on your part in order to get the best possible consolidation loan. I’ll walk you through the basic steps you need to take in order to consolidate student loans quickly and painlessly.

1. First determine whether student loan consolidation is right for you. You can figure this out by researching several student loan consolidation lenders and paying special attention to the interest rates being offered, special incentives or discounts for consolidating, repayment terms, prepay penalties (if applicable), approximate monthly payments and other related information. After researching five or more lenders, you can generally get a good idea about whether or not consolidating makes sense in your case. If it will help you lower payments, interest rates and make your student debt much more manageable, it may be something worth pursuing further.
2. Any reputable lender will consolidate your student loans, so you should research online as well as local banks and lending institutions to find the best rates. There are several important points worth mentioning here:
   • Consolidation loans do not come with doc prep fees or charges when applying, so if you encounter a lender who is trying to charge fees for their services (other than interest rates), run the other way. This type of lender may be operating a scam or at the very least a shady operation.
   • Student loan consolidations do not require a credit check or cosigner, so you can get approved no matter what your credit history.
   • Most lenders require that you have at least $7,500 in student loan debt before you can consolidate.
   • You cannot apply for consolidation until you are in your six month grace period following graduation or dropping out of school. You can apply at any time after that point as well.
   • If you have all of your student loans through a single lender, you must consolidate with that lender.
   • All federal student loans are eligible for consolidation, and most private student loans are eligible as well.
3. After you’ve researched and found a reputable lender for you consolidation loan, it’s time to calculate the payment amount you can afford. This is an important step because you do not want to take out a consolidation loan with a longer repayment period that you have to. In other words, do not take out a 30 year loan when you can afford the payment on the 20 year loan. Keep the repayment terms as short as possible while still making sure that the monthly payment will be manageable for you.
4. Next be sure that the interest rate is lower than your previous student loans as a whole. Consolidation loans sometimes result in higher overall interest rates, so be sure that if it does turn out to be more than approximately .5-1% higher than what you were paying. You don’t want your interest rates to increase drastically; that will end up costing you a lot of money in finance charges over the life of the loan. Here’s how student loan consolidation interest rates are calculated:
   • All of you current student loan interest rates are averaged together and then rounded up to the nearest 1/8th of a percent. By law the highest interest rate on a consolidation loan is 8.25%.
   • Once you have completed all of the above steps and everything checks out to be good, you are finally now ready to sign the dotted line. The lender will pay off all of your existing student loans and then issue you the new consolidation loan. You would then have just one monthly payment each month. Consolidating student loans typically lowers monthly payments by as much as 54% (Sallie Mae), so your payments will now be much more manageable.