How to Consolidate My Child’s Student Loan

“How do I consolidate my child’s student loan?” is a common question parents ask today. Consolidating student loans offers the freedom of making just one payment on one loan instead of making several different payments each month. Locking in an interest rate on a loan consolidation can also save you a lot of money and it easier to manage the loan.

Consolidate My Child’s Student Loan

When you start the journey and decide, “I want to consolidate my child’s student loan,” the first thing you should do is make sure that the loans can be consolidated. If it’s a federal education loan, it can be consolidated but there may be certain restrictions in certain cases. If the loan has already been consolidated, you can’t do it again unless you add another loan into the package.

The biggest restriction is that you can’t consolidate your child’s student loans with certain private loans of yours. Each type of loan may have specific restrictions in this area. For instance, you can’t consolidate your own PLUS loans with a Stafford loan given to your child, and you can’t consolidate any non-federal loan with a Stafford or other federal loan.

When you decide, “I’m ready to consolidate my child’s student loan,” you also want to examine your reasons for consolidation. You can extend the plan over a longer period of time, which means you have the debt burden longer but your monthly payments are reduced. The standard consolidation repayment is a 10-year plan, but most can be extended as far as 30 years if necessary.

If the balance of the loan is less than $5,000, you may not be able to find a lender willing to consolidate, and some only handle loans with balances over $7,500. But any lender can help you consolidate these loans. There are no special banks or agencies you need to do this. And you should never pay anyone to do this for you—they make their money from the interest you pay on the loan.

When you contact a lender, pay attention to the interest rate you’re given. The advantage is that your rate is locked in so that if interest rates rise while you’re repaying the loan, you still pay the original rate. The opposite also holds true. If rates lower, you still must pay the higher rate you agreed to when you decided it was a good decision, “to consolidate my child’s student loan” to save money and make it more manageable.