LOAN

What is loan consolidation?

Loan consolidation refinances multiple loans into one new loan with a new repayment term, monthly payments, and interest rate.

Consolidation loans are readily available from education loan lenders and loan holders—including Sallie Mae, who offers the SMART LOAN Consolidation Account.

When your consolidation loan is issued, your lender pays off the outstanding balances of all the loans you put in the consolidation.

In addition to simplifying record-keeping and check-writing chores, consolidation can significantly reduce your monthly payment burden—by up to 58% or more! That's because consolidation lets you stretch your repayment period from the standard 10 years to up to 30 years, depending on the amount of your education debt. The lower payment means you'll have more money available to meet other expenses.

Consolidation lets you convert multiple variable-rate education loans into a single loan with a fixed interest rate.

Extending the repayment period increases your total interest payments because you'll be making smaller payments over a longer period. There are no prepayment penalties for accelerating the payback of your consolidation loan.

How long does it take to get a consolidation loan?

The typical processing time for a consolidation loan is four to eight weeks, although many loans can be completed in only two to three weeks. Until your loan is processed, you continue to make payments on your existing loans if you are not in deferment, forbearance, or the post-school grace period. The first payment on your consolidation loan is due within 60 days of disbursement.

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