Student Loan Consolidation: A More Personalized Approach To Paying Off Your Loans
Date: September 30, 2022
With the Biden administration’s recent announcement1 regarding partial student debt relief, student loans are again in the spotlight. If you’re one of the millions of Americans who have taken out loans for post-secondary education and feel distressed about your plan for when payments resume in January 2023, it may be wise to consider student loan consolidation.
Affinity Federal Credit Union’s Student Loan Consolidation Program 2 allows borrowers to combine their multiple monthly payments into a single convenient payment with a fixed, lower rate. Additionally, Affinity offers flexibility in payment plans and there are no application or prepayment fees.
What Happens When You Consolidate Student Loans
Student loan consolidation plans are applicable to both federal and private loans. When you establish a plan, you can either reduce or extend your payment timeline depending on what works best for your financial situation. If you have unpaid interest on your loans, it will add to your principal balance once the loans are consolidated — possibly saving you interest costs in the long run, depending on your plan.
If you’re looking to pay off your loans more quickly, you can refinance to a shorter-term plan with lower interest rates. On the other hand, a longer-term plan would allow you to lower your monthly payments, but with higher interest rates.
When deciding whether to consolidate student loans, you should consider whether you’re comfortable giving up the protections that come with federal loans, such as income-driven repayment plans, loan-forgiveness programs and deferments. Ultimately, the decision to consolidate revolves around one pivotal question: Is it the right option for you?
Eligibility for Affinity’s Student Loan Consolidation Program
Affinity members may be eligible for our Student Loan Consolidation Program based on a few factors. For starters, Affinity’s program is only available to U.S. citizens and permanent residents with existing education loans. The loans must have been used for post-secondary education at a Title IV institution and are only applicable to federal and private loans, excluding parent PLUS loans.
To qualify for Affinity’s Student Loan Consolidation Program, the borrower must have at least six months of full-time employment and a minimum credit score of 600. The borrower must also be named on the loans they’re consolidating, and those loans need to be in good standing.
In order to move forward with student loan consolidation, you must first acquire a payoff letter from your current lender(s) or servicer(s).
This letter includes the amount of money that will completely pay off your loan, taking into account the loan balance, acquired interest and any additional fees. You also need a copy of your transcript or diploma, verification of income, and a self-certification form.
If you’re interested in consolidating your student loans with Affinity, please contact our Member Service Center3 at 800-325-0808 or visit an Affinity branch for more information.
This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments.
- Retrieved from: https://studentaid.gov/debt-relief-announcement/
- Retrieved from: https://www.affinityfcu.com/personal-banking/borrow/loan/student-loan-consolidation-program
- Retrieved from: https://www.affinityfcu.com/forms/member-service-center-form