 TITLE: Consolidating Student Loans: Should You Do It? CONTENT: Private Student Loan Consolidation\n----------------------------------\nConsider private student loan consolidation, or refinancing, in the following circumstances:\n*   **Your credit and income will qualify you.** Generally, lenders look for good or excellent credit, which is typically a credit score of 670 or higher. You'll also need to demonstrate solid income and meet a lender's debt-to-income ratio (DTI) requirements. Your DTI is your total monthly debt payments divided by your gross monthly income, and the lower your DTI, the more likely you are to repay loans as agreed, in lenders' eyes. You'll likely have an easier time refinancing if your DTI is below 50%.\n*   **You have high interest private loans.** The biggest benefit of private student loan consolidation is the potential for interest rate reduction. Before moving forward, consider how much you stand to save from the process. You're most likely to see savings if you have high-interest loans—typically from private lenders—and you're eligible for a lower rate. Federal loans typically come with lower interest rates to start. Plus, refinancing them will mean giving up federal loan protections including payment reduction programs, long deferment periods and forgiveness options.\n*   **You have access to a creditworthy cosigner.** If you can't qualify for private student loan consolidation on your own, you can apply with a cosigner. That person will be responsible for repaying the loan if you can't, so make sure they understand the risks of cosigning. Some lenders will allow you to release the cosigner after a certain number of on-time payments, and if you meet other financial requirements. Check your loan agreement for a policy like this if you decide to use a cosigner.\nIf you decide to move forward with private student loan consolidation, here's how to do it:\n*   **Check your credit score.** First identify whether you're a good candidate for private consolidation. You can check your Experian credit score for free, and if it's not in the good to excellent range, explore cosigner options or consider working to improve credit before applying.\n*   **See the rates you may qualify for.** Many lenders offer the opportunity to prequalify for refinancing on their websites. They'll perform a soft inquiry, which won't affect your credit score, and you can compare likely rates from multiple lenders before submitting a full application.\n*   **Choose your terms.** Lenders generally offer multiple repayment terms, such as five years, eight years or 10 years. Pick the shortest term you can handle, which will keep your interest payments to a minimum.\n*   **Gather necessary documents.** When you've chosen a lender you'd like to work with, collect the documents you'll typically need to submit with your application. These can include pay stubs, tax forms like your federal W-2 form and a payoff statement telling your new lender how much of your current loan balance it will need to pay off.\n*   **Keep making regular loan payments.** During the refinancing process, continue paying your previous loans until your new lender confirms you can stop. That will help you avoid inadvertently missing a payment, which could hurt your credit score. You'll now make one payment per month to your new lender. END