Five Ways Consolidating Student Loans Can Save You Money
Consolidating Student Loans Can Boost your Credit Score
Most students take out numerous loans for college, each with its
own interest rate and its own monthly amount. The plethora of
different loan sources is a great benefit in terms of paying for
college, but when it comes to credit rating, this long list of
outstanding loans can put a serious damper on your overall
By consolidating student loans, your credit report will show one
combined loan, usually with a much lower overall payment, which
equates to a more favorable credit rating. By consolidating
student loans, you most likely also benefit from a much lower
payment, thus lowering your debt to income ratio.
Consolidating Student Loans Reduces Debt to Income Ratio and
Increases Buying Power
Having a low debt to income ratio, or the monthly amount owed
compared to the amount earned, makes an incredible impact on the
amount of money you'll be able to borrow and afford for a first
home or reliable transportation.
The total amount of household debt in the US last year was more
than 100% of disposable income. Rising education costs have
created a vicious cycle for today's graduating students. As your
debt to income ratio rises, so do the interest rates of each new
loan. Keeping this ratio low by reducing your monthly bills can
literally save you tens of thousands of dollars over a lifetime.
Consolidating Student Loans Reduces Dependence on Credit
Having lower bills in the years following college means less
reliance on high interest credit cards and other loans. The
average college student carries a whopping 6 credit cards with a
total balance over $2100.
This means that the $100 credit card purchase for new work
attire could cost more than $200 over the 12 months it takes to
pay the full balance. Fortunately, smart financial planning,
including consolidating education loans, can help students and
young professionals live a life free of high interest debts.
By Consolidating Student Loans, You are Locked into Today's
Low Fixed Rates
Just because interest rates are low today doesn't mean they will
stay that way. In fact rates over the last several years are
lower than they've ever been in recent history. It's amazing how
much a small percentage point can save or cost on a college
education bill over the course of a loan repayment.
The Federal Consolidation Loan allows you to lock into today's
low interest rates when consolidating student loans.
Consolidation loans usually have a longer repayment period and a
lower monthly payment than is available on the underlying
education loans. Calcula
te your savings after consolidating your student loans.
By Consolidating Student Loans, you can Receive Additional
Interest Rate Discounts
Companies that specialize in consolidating student loans like
ScholarPoint.com offer additional consolidation benefits such as
auto payments, and consecutive payments.
Auto Payments: Receive a reduction in your interest rate
for making your payments automatically from your bank account
when you consolidate your student loans.
Consecutive Payments: Some student loan consolidation
companies give you the opportunity to reduce your repayment
interest rate up to one full percentage point by simply making
payments on time.
No Interest Deferral: Take advantage of the flexibility
of student loans by deferring loans during qualified times.
While enrolled in graduate school, serving in the military, or
volunteering with the Peace Corps, you can not only defer
payments, but stop interest from accruing as well.
Grace Period: Consolidating during your grace period
allows you to lock in a rate that is lower than the standard