The Benefits of Student Loan Consolidation
If you are like many other college graduates, you may have amassed an overwhelming amount of debt in student loans in order to get through school. Now that you’re finished, what can you do about all those loans?
Get Out From Under Those High-Cost Loans
Did you know that the amount of money loaned to college students nearly tripled between 2001 and 2006? That’s an increase of over ten billion dollars in five short years! If you took out private student loans with variable interest rates, you might be in the same boat as many other college graduates–rising payments with an income that doesn’t match! So where can you find relief? The solution may be student loan consolidation. Some of the benefits you could see if you consolidate your student loans include making one payment to one lender every month for all loans that you consolidate, lowering your monthly payment, and getting one rate on your consolidated student loan.
Consolidating Private Loans vs. Federal Loans
Repaying private student loans can be expensive. Rather than paying different interest rates on multiple loans, you’ll have one rate on the entire balance if you consolidate to one new student loan. Additionally, if rates have gone down since you took out your private student loans you may be able to consolidate your student loans based on today’s low rates and you could see significant savings. Private loan consolidation interest rates are based on credit worthiness. If you have federal student loans, look for a program that specifically consolidates federal student loans. These programs are usually federally subsidized and have lower rates than private consolidation loans. The interest rate for your consolidation loan is a weighted average of all of the interest rates on your federal student loans. Loans that qualify for a federal consolidation program include Stafford Loans and PLUS loans, among others.
Don’t Underestimate the Importance of Student Loan Consolidation
If your monthly bills are stacking up and you have more than one student loan, applying for a consolidation loan to make your monthly payments more manageable may make sense. Consolidate federal loans separately from private loans because federal consolidation loans generally have lower interest rates. To learn about how to consolidate your student loans visit How To Pay Student Loans