Student Loan Consolidation Hot Topics

A lot of companies - including the Student Loan Network - use the terms consolidation and refinancing interchangeably, and for good reason - in terms of financial instruments, mortgage refinancing is the closest analogy to student loan consolidation. There are some key differences, though.

Difference #1: Revolving door?

Mortgages can be refinanced many times - as many times as you want, actually. With student loan consolidation, without going through a giant bureaucratic maze, most borrowers consolidate just once, or maybe twice.

Difference #2: Show me the money!

Mortgages have lots of things tied to them - equity, credit checks, property, collateral, fees (and fees, and fees, and fees), closing costs, early payment penalties, etc. With student loan consolidation, there are no credit checks, no fees, no collateral, no cosigners, and no repayment penalties.

Difference #3: No balloons

Each time you refinance a mortgage, you have the option of adding to the loan, taking out more money. With student loan consolidation, you can only get a consolidation loan for the exact balance of your existing student loans. You can’t borrow a penny more.

Difference #4: Rate my rates

Mortgages can have wildly varying rates - in fact, depending on market conditions, you could apply for a mortgage today and get a different quote with a different rate tomorrow. Student loan consolidation uses a fixed formula determined by Congress, adjusted every July 1. The only place lenders can vary is on the borrower benefits, or discounts. By law, all federal student loan consolidation companies must offer the same rates.