How long it takes to consolidate student loans varies per loan servicer. Every loan servicer has its consolidation process with a timeline ranging between 30 and 75 business days, depending on the kinds of loans you intend to consolidate (federal or private).
Consider the following timelines for consolidating student loans to get a general overview of the process.
How Long to Consolidate Student Loans?
Loan consolidation may take several weeks or months, depending on your servicer. The process involves combining your existing loans into one new policy so you can make single monthly payments instead of multiple ones.
For federal student loan consolidation, expect a few months after application before your new consolidated loan takes effect. Meanwhile, consolidating or refinancing private student loans may take weeks, depending on a servicer’s unique process.
Consolidating Federal Student Loans
You must complete the Federal Direct Consolidation Loan Application and Promissory Note in a single session to consolidate your federal student loans. This online process may take 30 minutes to complete, granted that you have gathered all your personal and financial information ahead of time.
After your application, your new loan servicer will contact you to determine whether you need to submit additional information. Expect 30 to 45 business days before you get results. Although this timeline is the Department of Education standard, some servicers require up to 75 business days for complete processing.
Meanwhile, you must continue paying your current loans until your servicer proceeds with the consolidation process. Once your new servicer determines your existing loans are eligible for consolidation, you can begin paying your new loan to pay off your old ones.
On top of their standard processing period, you may encounter processing delays due to unintentional errors. To ensure a smooth process, you may need assistance from a student loan advisor to help you prepare your application documents.
Refinancing Private Student Loans
Each refinancing lender has a unique process that typically takes up to three weeks to complete. Most private lenders take five days to review your application thoroughly and require two or three more weeks to process your payout.
This general timeline depends on how fast you provide your supporting documents. You will need to prepare your personal and financial information beforehand to ensure everything runs smoothly.
The private lender you choose for refinancing typically conducts a credit check to determine your rate. So, be sure to provide your most recent documents to access better rates.
Should I Consolidate My Student Loans?
Combining multiple student loans into one loan can help simplify your repayment terms and help you reduce your stress in the long run. On average, student loan debt for graduates with bachelor’s degrees is at $29,000. If you’re planning to repay this within ten years with a loan interest rate of 4.53%, you’ll have to shell out $305 every month. This amount can take a toll on your life, especially if you had several student loans.
You can consolidate your federal student loans by applying for a single federal direct consolidation loan or by refinancing your student loans through a private financing institution.
Consolidating all of your student loans is a smart move as you’ll be able to:
Easily Manage Your Debt
Consolidating your student loans will make it easier for you to manage your debt because you’ll only have to make one loan payment every month instead of making several.
More Time To Pay Off Your Debt
With the number of private companies offering loan consolidating services, you won’t have any problems finding one that allows you to pay your student loans within a longer repayment term. This can be very beneficial to you because the longer your repayment term is, the lower your monthly payment will be.
Have One Fixed Interest Rate
Aside from being stressful, having to pay different loans from different lenders can also cost more money in the long run as lenders often have different interest rates. You won’t have to worry about this problem when you choose to consolidate your student loans, as you’ll only have to think about one interest rate moving forward.
Knowledge Is Power
In short, you’ll have better chances of living a debt-free life if you consolidate your student loans. While you can consolidate federal student loans or refinance both federal and private student loans to make repayment simpler, these options may affect your eligibility for loan forgiveness.
So before taking this direction, make sure to do your research to know the pros and cons of your individual situation. Having a clear picture of how loan consolidation works will allow you to manage your expectations and create solutions to potential problems in the future.
Conclusion: How Long Does It Take To Consolidate Student Loans?
Expect up to 75 business days before you see your consolidated student loan payout. Consolidating student loans, whether they are federal or private, requires application and processing time.
You can apply for a Direct Consolidation Loan for your federal student loans online, which may take around 30 minutes to complete. Once you apply, your servicer may take between 30 and 75 days to complete the consolidation process, assuming you face no delays in the system.
Meanwhile, private student loan refinancing usually takes five days for application and an additional two or three weeks for processing. Each private lender has a unique system, so you might want to review your options before settling with one servicer.