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You can’t consolidate private loans in the federal Direct Consolidation Loan program, but some private lenders allow you to consolidate federal and private loans together. Your rate is determined by the weighted average of the interest on the loans being consolidated rounded up to the nearest one-eighth of 1%.The Direct Consolidation Loan program is the right choice if your goal is to simplify the process for repaying federal loans and keep your options open for the many repayment plans available for federal loans. If you’re using private lenders for student loan consolidation, there is a chance you could get a better interest rate and possibly lower monthly payments. That’s because federal loan rates are so low – fixed rates of 4.45% for undergraduates, 6% for graduates in 2017-2018 – that it’s difficult for private lenders to beat the rates and make a profit.Still, some companies, like So Fi and Lend Key, have found a way to offer students a competitive rate and a variety of repayment conditions.These are private loans where credit score and other conditions are weighed in.When you consolidate student loans through private lenders, you essentially are refinancing your loans.Combining several student loans, whether federal or private, only makes sense if you are going to receive a lower interest rate and reduced monthly payment terms.If you sign and date the application, it is a binding contract.If you submit it without signing, the application can’t be processed.

Online lenders So Fi and Lend Key have jumped to the front of the line among newcomers who are becoming big players in a business that traditionally was dominated by banks and credit unions.Lend Key does a lot of the same things, only it uses a network of community banks and credit unions to fund the consolidation loan.Like So Fi, the application process for Lend Key is completely online and takes around 10 minutes with a response time of about three minutes.Ideally, you would qualify for debt consolidation after graduation.However, you also could qualify when you leave school or are enrolled less than half-time.

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