Is Student Loan Consolidation Good?
Consolidating your student loan(s) is one of the smartest things
that you can do. You should consider a student consolidation
loan if you have several federal student loans or even just one
large one.
Student consolidation loans will have fixed interest rates which
are similar to those of the loans that are being consolidated.
The amount that you can save through consolidation can be up to
58%.
Federal Stafford loans, Federal Direct Loans, Federal Perkins
Loans as well as many others can be consolidated. Most of the
time, they already have low rates.
Advantages
- You will have a single loan payment which is often lower than
what you currently pay. - It is easy to set up. - It will help
lower your debt burden. - You can secure the lowest interest
rate at the time. - It can help you qualify for new or renewed
deferments.
What To Consider
When you consolidate, make sure that the interest rate that you
are offered is lower than your current rate. You want to pay off
your student debt easier and maybe quicker too.
While consolidation can simplify the loan repayment process and
lower your monthly payment, in the long run it usually increases
the total amount that you will have to pay.
Student loan consolidation provides lower monthly payments by
allowing you to spread the loan over 30 years in some cases. You
are paying more payments, so be sure to compare the total cost
of repaying your unconsolidated loans with the cost of repaying
them through the consolidation loan.
The process of consolidating is very flexible. Consolidation is
available from before you graduate down through years of
repayment.
First, you need to gather information about your current loan.
You need to know the balances and the interest rates, the names
and addresses of companies and the names and addresses of
personal references. The National Student Loan Data System can
help provide you with the information that you need since it
holds the most complete and accurate information for federal
loans.
Paying Them Back
You will have 2 options to pay these loans back. 1. Pay a
standard amount each month. This will include principle and
interest. This is the lowest cost of interest paid way to go.
2. Or a graduated repayment. Here you start with lower payments
that are only interest, but then they will keep increasing.
Usually repayment of your consolidation loans will begin in 60
days and will take from 10 to 30 years to fully pay back.
There are some questions that you should ask the lender before
going forward.
- is there a rate reduction, for example for making your
payments online or on time?
- does the loan meet your specific needs?
- is that the best interest rate available?
To get a student loan consolidation, you can still be enrolled
in school or graduated. Either way, you'll find many lending
options that will fit your needs.