Finding the best place to consolidate student loans can help you become one less person burdened by post-secondary debts.
Did you know that one in eight Americans is currently carrying student loan debt, a total of approximately 42.9 million people?
With the overwhelming borrowed amounts paired with continual interest, it can seem impossible to get through it without help.
This is where the top lenders come into play.
What Is Student Loan Consolidation?
Student loan consolidation, also known as loan refinancing, is a way to help individuals better manage their loans.
When you enter college or university, you probably won’t be able to pay your entire tuition out of pocket.
In these instances, students will reach out to financial institutions and other lenders for a loan to put towards their schooling.
Once you’ve graduated, or even during your studies, you will be responsible for paying the borrowed amounts back.
The most significant concern is the money students are on the hook for, especially with specialized degrees.
A four-year degree program can sometimes cost upwards of $50,000, depending on the discipline. This amounts to $200,000 for a four-year program.
With those numbers in mind, it is no wonder that more college and university students are reaching out for financial aid.
By working with a lender, they essentially finance your schooling under an agreement and contract that you will pay back your borrowed sums.
However, since it also includes interest, it is not as easy as making a payment towards the principal every month.
Sadly, some students find that they owe double the amount they initially borrowed at the end of their schooling.
This point is particularly true if you opt not to make regular payments and face additional financial penalties.
In these instances, student loan consolidation can be the only solution to help lessen the financial burden.
How Does Student Loan Consolidation Work?
Fortunately, the process of going through student loan consolidation can be simple with the right lender.
The majority of these companies are well-versed in the challenges associated with paying student loans back.
They often have streamlined processes and will help guide you through the entire process.
Step 1: Creating a Consolidation Plan
Once you’ve found the debt consolidation company you want to work with, the first step is to make a consolidation plan.
During this phase, the lender will require proof of your existing student loan to see the total amount you owe.
Using this number, they can then begin generating a repayment process for all of your school-related expenses.
You’ll also find that they will require proof of income, such as pay stubs, to create a debt consolidation plan.
Although paying back your loan is the primary objective, making sure you can do so comfortably is more important.
The entire premise of these companies is to ensure lenders get their money back so that your payment plans will be comfortable.
Step 2: Reviewing Interest Rates
As with any financial situation where you are borrowing money, interest rates are to be expected.
Your debt consolidation plan will also have interest that you need to consider.
The interest you will be responsible for will be charged monthly, similar to if you paid your student loans back independently.
At this point, you might be wondering what even is the point of debt consolidation.
Students who have multiple loans from different lenders are bound to find debt refinancing the most beneficial.
Instead of owing interest to three separate lenders, for example, you will have one interest amount on your total owed.
This process can make it less expensive, depending on the interest totals per loan that you own.
Also, it makes managing your finances significantly more manageable, as you will pay back only one lender rather than three.
Overall, it helps make loan repayment less of a headache.
Step 3: Debt Counselling
Another unique feature of some loan consolidation companies is that they offer debt counseling.
As a client, you can learn innovative tips and tricks to help manage your finances based on your personal figures.
This process can be exceptional for ensuring you pay not only your student loans but all of your other debts as well.
With the help of professional and custom-tailored debt advice, you can live a more financially responsible lifestyle.
Also, it will give you the confidence you need to work through the challenges of managing personal debt.
Step 4: Loan Repayment
The loan repayment process with a debt consolidation company is a two-prong approach.
First, the consolidation company pays off your loans, and you are then responsible for paying the consolidation company back.
This process helps ensure that you are not on the hook with other financial and educational institutions.
However, just because your loans are paid from your initial lenders doesn’t mean you are in the clear.
You will still be responsible for abiding by the stipulations laid out in your agreement for repaying the consolidation company.
How to Get Student Loan Consolidation
Let’s take a look at some of the most typical steps you’ll have to follow to get your hands on student loan consolidation.
Step 1: Find a Lender
The first step of the process is to make sure that you find a reliable and reputable lender that offers consolidation.
As mentioned, many of these companies also refer to these services as loan refinancing.
You will want to make sure you choose a lender that is not only well known but also has plenty of positive reviews.
It is also important to consider the financial outlook of the institution.
Companies with more clients and a strong foundation are more likely to have affordable interest rates.
On the other hand, smaller companies might have higher interest rates and fewer associates to help you with any questions.
Step 2: Apply for Consolidation
The vast majority of applicants are bound to be approved for student loan consolidation, but not everyone will be.
Your financial status will be taken into consideration, as will your total monthly and annual income.
Individuals without income aren’t likely to get loan assistance because there is no guarantee they can pay the amount back.
With that said, it is understood that most people apply for loan assistance because of a lack of funding.
You won’t need to make an incredible amount of money annually, but you will definitely need a job.
Another reason as to why your income and liabilities are necessary is for calculating your loan repayments.
Debt consolidation companies take the total amount of your loan and spread it out across “X” number of years.
Each month, you will be responsible for making a lump sum payment towards your total amount owing.
Your monthly payments will be adjusted to a comfortable amount for you to live with, depending on your income.
Step 3: Read the Fine Print
As with any agreement or contract, you must read the fine print before signing anything.
Although loan consolidation companies are there to help, you must ensure your contract is suitable.
You will want to confirm your monthly payments and determine if there are any extra fees or penalties.
For example, some lenders will charge a certain percentage if you pay your loan off early.
This situation occurs because the lender loses out on interest payments for however many months are remaining on your term.
It is also essential to ensure your consolidation handles all of the debts you need to cover.
Remember, the primary objective of these agreements is to put all of your debt in one sum.
The last thing you want is to have to pay four separate loans back when you could have one.
Also, always take a second look at the interest rate affixed to your loan and whether it will increase or decrease over time.
Best Place to Consolidate Student Loans: Top Lenders
Now that you have a good idea of what loan consolidation is and how it can help, it is time to help you find a lender.
You will most probably come across hundreds of companies that offer loan refinancing, especially in the United States.
To guide you in the right direction, we’ve curated a list of the top companies to consider, especially for student loan debt.
SoFi is one of the few loan refinancing companies that offer plenty of benefits to their clients.
You will have access to various perks, from financial planning to career coaching, to support you in reaching your financial dreams.
Another significant benefit of this lender is that they work with small and large student loan debt.
Clients can sign up to pay back sums as small as $5,000, depending on your state.
Also, there isn’t a maximum loan amount that you have to adhere to.
It is important to note that there is one vital thing to consider when applying for a loan from SoFi.
Students will need to have graduated with an associate’s degree at minimum to acquire a loan.
There are also likely financial requirements and credit minimums to consider.
When you begin the quoting process, they will discuss these requirements with you and let you know if you’re eligible.
Some other information you will have to provide when applying for a loan includes:
- Financial history
- Income sources
- Credit score
After submitting all of your documentation, they will then notify you if you’re eligible for assistance.
As mentioned, there are a few key perks you will experience by being a SoFi client. The most notable benefits include:
- Career Coaching
Clients can access personalized career coaching to help them ask for promotions, build their brand, or find a better job.
- Unemployment Protection
If you’re laid off, clients can postpone payments for three months at a time for a total of 12 months.
- Financial Planning
Preparing your finances is essential for success, and SoFi provides a financial planner for every customer.
If you know people struggling with student loan debt, the referral program offers $10 per quote and up to $300 for each referral that gets approved.
2. RISLA (Rhode Island Student Loan Authority)
A few sources recommend RISLA as one of the best options for student loan refinancing.
Their largest claim to fame is that they have affordable rates paired with competitive perks.
Students can refinance loans starting at $7,500 and up to $250,000 without any origination or application fees.
You will be able to select from a few term options, ranging from five to 15 years, to find the most agreeable payment term.
Also, all of their loans have fixed interest, which can be convenient for students who prefer solid planning.
At this time, every loan that RISLA offers has fixed rates between 3.19 and 5.59 percent, which are incredibly agreeable.
There is also the opportunity to acquire a significant discount of up to 0.25 percent when you sign up for autopay.
Beyond their low interest rates, there are a few incredible perks you could access if they find you eligible. These include:
- IBR Plans
Income-based repayment plans are a phenomenal opportunity for students and working professionals.
Using this strategy, RISLA determines your repayment based on your family size as well as your income.
This process could mean that lower-income earners could have reduced monthly payments compared to others.
Although forbearance is not guaranteed, it could be a possibility in an emergent situation.
Unemployed individuals, for example, could be eligible for this benefit.
They will be able to delay payments for three months at a time for up to 12 months.
Clients who experience permanent disability could be eligible to receive a disability discharge.
This benefit is relatively unheard of, especially with student loan companies.
For instance, if you experience a mental or physical impairment that deems you unable to work, there’s a chance that they will waive your loan repayments.
Still, it is important to note that there is no guarantee you will be able to receive this benefit.
Also, you will need to provide significant medical documentation to receive loan balance forgiveness.
You’ve likely heard of Discover in the past due to its prevalence in the credit card industry.
Did you know that they also offer loan consolidation for an assortment of personal loans?
One of the most considerable benefits of this company is that they don’t have any hidden or upfront fees.
Even in instances where you miss a payment, you won’t have to worry about being penalized.
The only additional charge on top of your loan repayment is the interest, which is expected.
Also, like many other debt consolidation companies, you are likely to receive a discount when you sign up for autopay.
Discover offers both fixed and variable interest rates with terms of 10 or 20 years.
Variable loans can range between 1.74 and 5.74 percent, while fixed rates are between 3.49 and 6.99 percent.
When it comes to the total borrowed amount, you can refinance your student loans for as little as $5,000.
Another considerable advantage this company has over others is that you can begin repaying your loans at any time.
Instead of having to wait until after you graduate, clients can repay while they are still in school.
Also, there are very basic criteria for applying, including:
- Must be 18 years of age
- Must pass a credit check
- Must provide proof of income
4. Citizens Bank
As easy as it might be for graduates to find companies to refinance their student loans, non-graduates are a whole other story.
Unfortunately, most financial institutions require you to graduate with a minimum degree to be eligible for relief.
Citizens Bank is a fantastic solution for those who didn’t graduate but still require consolidation.
As a national lender, you will find that they have a strong foundation in the finance industry, giving you peace of mind.
Like many other lenders, you could be eligible for an assortment of perks, including:
- Autopay Discounts
If you sign up for automatic payments, you could receive an additional 0.25 percent off your interest rates.
- Loyalty Discount
Individuals with a second Citizens Bank account could receive 0.25 percent off their interest rates.
- Co-Signer Release
If you initially signed up with a co-signer, you can release them from your loan after 36 months of on-time payments.
It is important to note that many of the lending requirements for Citizens Bank are slightly higher than others.
You will find that there is a minimum refinancing amount of $10,000, but you have the added benefit of flexible terms.
Repayment terms can be five, seven, 10, 15, or 20 years with the added benefit of waived origination and application fees.
Also, you will have some flexibility when it comes to interest types, as you can opt between variable and fixed.
Variable interest rates fall between 2.24 and 8.90 percent, with fixed interest between 2.69 and 9.15 percent.
A few of the other requirements to consider include:
- Applicants must be out of school
- Loans must be in repayment status
- Non-graduates must make 12 on-time payments before refinancing
5. Education Loan Finance
ELFI, Education Loan Finance, is a fantastic solution for students looking for a consolidation company.
Unlike other lenders who also operate as banks, this company is solely for school loans.
Their extensive number of options covers all areas of post-secondary schooling and is offered by SouthEast Bank.
Students from all 50 states and Puerto Rico can opt to refinance federal and private student loans.
All plans are applicable for parent, graduate, undergraduate, and MBA loans across various specialties.
Even students in more costly degree programs, such as dental, law, and medical school, will be eligible.
There are a couple of notable benefits that ELFI has to offer, including:
- No Fees
Finding an institution without fees is ideal.
In this case, you’ll be glad to know that ELFI doesn’t have prepayment, application, or origination fees.
- Co-Signer Acceptance
If your financial history is not strong enough to receive financing independently, you can add a co-signer.
- No Maximums
Regardless of the cost of your schooling, there aren’t any maximum loan amounts to consider.
Although there are a few significant perks of ELFI, there are many important drawbacks to take into advisement.
One of the first is that they don’t offer a co-signer release, which can be challenging if you require one.
Regardless of how regular and on-time your payments are, your co-signer will be required for your term’s duration.
Another concern is the minimum refinancing amount, which won’t help those with cost-effective degrees.
To be eligible for relief, you will need to borrow a minimum of $15,000.
Note that all applicants will require a FICO score of at least 680 to even be considered.
Finding a debt consolidation company that works with fair credit can be challenging.
Earnest is one of the few that helps students with credit scores as low as 650 and have agreeable minimum loan amounts.
This private lender has been offering graduate and current loans and repayment plans for students since 2013.
One of the most significant benefits of Earnest is that they offer a more tailored approach to loan consolidation.
As such, you will be able to choose your own terms that help cover your education’s total costs.
Another added benefit is that you won’t have to pay extra application fees, nor will you need to worry about late fees.
Clients have the opportunity to choose an agreeable term length as well as their monthly payment amount.
There’s also flexibility in requiring a co-signer, either for graduate or undergraduate loans.
The primary consideration to remember is that you must be a full-time or half-time college senior or graduate to be eligible.
The central premise of Earnest is to help those in school debt acquire a new relationship with their loans.
They currently have over 164,000 clients with more than $14.5 billion in student loans refinanced.
The company’s interest rates are also known to be particularly low, especially if you sign up for autopay.
Variable rates can start at a 1.88 percent APR with fixed rates starting at 2.50 percent APR plus an additional 0.25 percent discount with autopay.
It’s important to note that variable rates aren’t currently open to residents of:
- New Hampshire
If you’re eligible for loan refinancing through Earnest, you will have access to a few great benefits. These incentives include:
By far, the most significant benefit of this company is its flexibility.
You can consolidate multiple loans under one account and pick a payment and loan term that works best for you.
There is even the option to remove a co-signer as long as you meet the eligibility requirements.
- Customer Service
It is far too often that people find themselves searching for a student loan company designed to help.
Earnest doesn’t have robocalling or digitized customer service; instead, you have real customer service associates.
These individuals are highly trained to be as helpful as possible while still offering compassionate service.
- Online Quoting
Instead of talking to someone in person, it is possible to obtain a quote entirely online.
The entire process can take as little as two minutes, and you will have a clear idea of your possible interest rates.
Also, checking on your rate won’t impact your credit score, which is essential for your financial history.
- Easy Loan Management
With the use of the Earnest app, you can effortlessly manage every aspect of your loan repayments from anywhere.
By enabling autopay, you will never miss a payment but make extra or early payments without penalties.
There’s also the option to skip a payment once per year and pay it back at a later date.
You can choose to increase your payment amounts at any time, adjust your payment date quickly, and manage biweekly or monthly payments.
There is also the added benefit of consolidating both federal and private loans, covering all areas of schooling.
Overall, it is one of the few loan management companies that help make managing debt effortless.
As another platform designed specifically for student loan management, LendKey is a great resource.
They help connect community banks and credit unions with online borrowers to help you find the best rates.
Currently, they have over 99,000 borrowers and have assisted with up to $3.1 billion in undergraduate and graduate loans.
You will be able to add a co-signer to your account and even add multiple lenders to the quoting process to find the best rates.
There aren’t any application or origination fees to worry about, nor are there hidden fees.
Also, LendKey is known for its lower interest rates.
As a borrower, you can get up to 0.25 percent of your interest reduced by making automatic monthly payments.
You will also be able to decide whether to pay directly from your savings or checking account.
Depending on your degree, you might find the consolidation totals rather agreeable, especially in the medical field.
At most, you can have $125,000 for undergraduate degrees, $175,000 for graduate degrees, and $300,000 for specific medical degrees.
Although LendKey seems ideal, there are also disadvantages to consider because they simply connect you to lenders.
Basically, you will have to abide by the terms set in your agreement with a lender rather than LendKey themselves.
Unfortunately, this could mean facing late fees, insufficient fund fees, and more strenuous eligibility criteria.
Also, there is little upfront information about qualifying criteria because every lender is different.
Compared to other debt consolidation companies, LendKey helps connect you to lenders but nothing considerably better.
The best place to consolidate student loans is with a financial company that has your best interests in mind.
You will need something with flexibility that makes loan repayments effortless and that meets a comfortable income.
Of the choices, Earnest is undoubtedly our top pick when it comes to managing student debts.