How To Consolidate Student Loans
If you’re sick of having to juggle around payments for several different student loans, student loan consolidation might be the answer. Consolidation is a good idea for anyone who has multiple payments to contend with each month. If you’re not a good record keeper, consolidation makes it easy as you only have one lending company, one envelope, and one set of payment coupons to deal with. You’ll also appreciate the cash saved when you pay one lower rate as opposed to several different loans costing significantly more money. With student loan consolidation, you’re also locking in the current interest rates so you don’t have to face rising rates in the future. What follows is a brief description of student loan consolidation.
There are pros and cons to student loan consolidation. First the pros:
Having one loan means having one lender and one payment. This eliminates having to coordinate several monthly payments. It also means less confusion when it comes time to pay the bills. By having a lower monthly payment, you’re sure to save money. When you extend your loan period, your credits are more likely to give you a reduced payment amount each month.
With today’s rising interest rates, you’re sure to appreciate the fixed interest rates of student loan consolidation. Lower interest rates will help you save money over an extended period of time. Student loan consolidation also offers more flexible payment plan options. If you’re not quite established in your career this can only work to your benefit. Make a lower payment now, and when you earn a larger salary your payments can reflect this.
Of course there are cons as well. Because you’re extending the life of the loan, you’re also extending the amount of time it will take to pay off your loan. This can mean a larger amount of money paid over time.
It’ll take 3 – 5 weeks from the time of approval for the consolidation process to begin. During this time, you’ll still be expected to make payments to your creditors. Thankfully there are no fees involved with student loan consolidation and you won’t be penalized if you decide to repay your loan early.
Because there’s so much competition among lenders, you can really take your time and shop around for the best deal. Try and find one that offers incentives for timely payments. You can receive as much as one percent back or even be able to apply that amount to your loan.
Both Subsidized and Unsubsidized Stafford loans qualify for student loan consolidation. PLUS and Perkins loans also qualify. Private loans, on the other hand, are ineligible. If you wish to consolidate your private loans, visit a private lending institution. Since there are guarantees offered by federally backed loans, credit checks aren’t necessary.
If you have trouble keeping up with the different student loans you’re obligated to pay, you might want to look into student loan consolidation. Just having one payment to make each month is reward in itself.
