6 Important Points for Student Loan Consolidation
There are many ways to reduce to your debt load, and the most common way to do this is through (drum roll please) consolidation. The idea of student loan consolidation, as the name suggests, is to combine all of your students loans into one giant super loan. It sounds bad but it’s really an ideal situation, trust me. Here are 6 important points you should know when consolidating your student loans.
By consolidating you will reduce your monthly payments; maybe by as much as 50%. But your payment is heavily dependent on what financial organization you select and your individual financial and credit situation at graduation time. Did you remember to pay off your credit cards every month? Well, here’s where that will help you.
Along with reduced payments you’ll also have a fixed interest rate. You can obtain fixed rates for the length of your student loan with some federal consolidation programs. This will ensure that your repayments won’t be subject to fluctuating interest rate changes. They will also remain the same for the entire length of the loan.
This next point may be good or bad, depending how you look at it. Some consolidation programs allow you to increase the length of the payment term. Why would you want to do this? If you start on a 20 year term you will ultimately pay a lot more in interest over the life of the loan, however your monthly repayments will be smaller. And across those years you will (hopefully) get pay raises, promotions, better and higher-paying jobs than when you started out fresh from college. Money will also mean less due to inflation and with a static payment every month, it will be much easier to pay off the loan with some time behind it.
Instead of writing 5 or 6 checks every month and worrying if you forgot that one payment, you’ll only need to remember one payment every month. How easy is that?
Eligible students who are still enrolled can take part in the in school consolidation programs. As long as you are still in school you can lock into a lower interest rate for the life of the loan. Technically, you are now in repayment status, but you are automatically deferred because you are still in school. The disadvantage to this consolidation program is that your six month grace period after graduation will be lost. Consult with your student loan advisor to learn what’s best for you.
Get a reduced interest rate. By combining all your loans into a student consolidation loan you could save yourself a nice wad of cash in interest. Student loan interest rates are always the cheapest but they can be even lower when consolidated. Almost 2 years ago was the best time to consolidate to lock in those lower-than-low interest rates. If possible, consolidate now, because rates are continuing to rise from their historic lows from over a year ago.
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Hi,
I find your blog very interesting.
Well done.
I will come back again to read more articles.
It does make a lot of sense to pay out one big loan rather than a few small ones. You can get good terms on your consolidated loan and also it can be tailored to suit individual needs.