Many companies have started offering student loan consolidation services. You may even receive an official looking letter offering you this service for a reasonable fee. They may even know the general amount of your loan. This article will explain the scam and then walk you through step by step how to consolidate your loans by yourself, through your loan provider, and for free. It is fast, easy, and done right on your loan provider’s website in about 20 minutes. Avoid paying unnecessary fees and releasing your information to a third party.

Consolidation Services

This is the most common  scam targeting recent graduates. Student loan consolidation scams are popular because many people have multiple loans out upon graduation. It is a very appealing prospect to have only one loan instead of 2-4 with varying interest rates. Some of these companies will even claim they can establish lower monthly payments and reduce over-all debt. All lies. The scam starts with one of these companies offering free consolidation services for a small ‘processing fee.’

Although there are companies that actually perform the consolidation services, they are by and large considered to be a poor value for the money, if not outright fraudulent because anyone can do it for free on the loan provider’s web page. These companies invest substantial effort into putting forth a positive, professional, and official appearance. They deliver documentation in ostentatious ways, depending on the naivety and unfamiliarity of most consumers. Their main goal is to deceive their prospective customers. Practically all the services offered by private student loan corporations are available without charge from the student loan provider.

Loan Consolidation: Step by Step

First gather all of your personal information: identification, social security number, pay stubs or a digital file of your tax return. Also, find two general references. Gather all of your loan information with amounts and dates. If you go into this prepared, it will be a breeze. It is recommended to use a digital file of your tax return so you don’t have to calculate your yearly earning from scratch.

Go to the website and enter your user name and password. If you do not remember your password or username, click on the I forgot my password prompt. You will also need a FSA ID for extra security. To the bottom right of where you log in, there is a prompt to create a personalized FSA ID if you do not already have one. You have the option to complete and submit the application online or you can download, print, and mail it. It is much easier and quite safe to do it online.

Filling out Your Application

From here on out it is easy. Just be honest and thorough. First you will be prompted to add basic information such as your social security number and birthday, as well as your contact information. Then you will be prompted to supply two references. The application will then ask you what loans you would like to be consolidated. Try to consolidate them all if possible, but if there are loans that you do not wish to be part of the consolidation, check them off now. Consolidation may raise your interest rate a little, but if you consolidate them all, you will only have one bill and one provider afterward.

You will have to have a repayment plan in mind that is suitable for your income. You may decide on an Income-driven Repayment Plan or a Standard Plan depending on how quickly you plan to pay off your loans or if you are currently employed or not. The system will guide you through these choices but it is smart to have a repayment plan in mind before hand.

After this section is complete, the system will guide you to an agreement section where you will read the contract carefully and sign with your FSA ID which acts as your electronic signature. After you submit your application electronically or by mail, it is important for you to keep making payments on your loans, unless they are in deferment, forbearance, or a grace period, until you are notified that all of your loans are paid by the Direct Consolidation Loan.