When Should You Consolidate Student Loans?
By Mark Kessler, Sat Dec 10th
If you have just graduated from college, the likelihood is thatyou are under a large amount of debt in the form of studentloans. You might be wondering if there is any way to reduce theamount you have to pay. One solution for reducing your debt isto consolidate your student loans.
Student loan consolidation is similar to refinancing a house onbetter terms: although the principal of the loan will not beaffected, the interest rates you can lock in when youconsolidate student to a fixed rate can be substantiallybetter, reducing your monthly payments by up to forty percent.Plus, you might be able to stretch out your payment time toreduce your monthly payment amount even further.
The disadvantage when you consolidate student loans during your initial six-month grace period is that you must start makingy our payments right away. This can be difficult if you have notfound a job after graduation, although you can wait until just before the grace period ends to consolidate, and still receive the lower rates. Furthermore, once you have consolidated your student loans, you cannot "un-consolidate" them again, so make sure to consider your choice carefully.
How is Interest Calculated When I Consolidate Student Loans?
When you consolidate student loans, your lending company paysoff your government loan and issues you a new loan under its ownname. The typical way to determine the interest rate on the newloan is to take the average interest rates on all of the studen tloans, and offer a new rate that is an eighth of a percentage point higher (up to a maximum interest rate of 8.25%).
Although agreeing to a higher interest rate might not sound likea good reason to consolidate student loans, this rate is fixedover the life of the loan, whereas the government rates willfluctuate. Since rates are at an all time low right now, lockingin the current rates might be a good idea. Furthermore, manybanks give you ways to bring down the percentage rates. For example, some lending institutions will drop the rate by as much as a quarter point if you agree to automatic deductions from achecking or savings account, whereas others drop the rates aftera certain number of timely payments. As an additional bonus,there is no penalty for paying off your consolidated loan early.
When Would You *Not* Want to Consolidate Student Loans?
Before you decide to consolidate student loans, you should carefully consider your alternatives. For example, did you realize that it might be possible to have your student loan cancelled altogether? Student loan forgiveness options include volunteering, for the Peace Corps for example, or working for the government in a low-income area as a teacher or doctor.Cancellation is not possible, however,
What would you do with extra money every month?
One of the major benefits of student loan consolidation is that in most cases, it can lower your monthly payments and make repaying your loans much more affordable. In some cases, you can see reductions of up to half your monthly payment (estimated on the consolidation of $100,000 in federal loans.)
So, assuming you go out [...]<img src="http://feeds.feedburner.com/~r/StudentLoanConsolidationHotTopics/~4/UB3U2ey4Oa4" height="1" width="1"/>
Ways to Save on Private Student Loan Repayment
When it comes to private student loans, one tense topic among students and parents is, “how are you going to pay for it?” Between often needing a cosigner and qualifying for a relatively high interest rate, there are a lot of considerations that go into choosing a private student loan that are not necessarily present [...]<img src="http://feeds.feedburner.com/~r/StudentLoanConsolidationHotTopics/~4/cJamKRDlVIY" height="1" width="1"/>
Consolidate or Separate? That is the question.
Shakespeare aside, figuring out if student loan consolidation is right for you can be a tricky question. It largely depends on your income and loan interest rates, and isn’t always the right choice for every student.
Currently, both federal and private loans can be consolidated by their separate types. The point of it all is kind [...]<img src="http://feeds.feedburner.com/~r/StudentLoanConsolidationHotTopics/~4/9govuKAw_Lg" height="1" width="1"/>
Consolidation not enough to lower your monthly student loan payments?
If you have tens of thousands of dollars in federal loans there is no question that consolidation will help you lower your monthly payments. When you consolidate your loans you roll all of your individual loans into one. This means you only have to worry about making payments to one lender. Consolidation also extends the life of your loans so that your monthly payments are significantly lower. However, for some people consolidation might not be enough to get your monthly payments where you need them to be.<img src="http://feeds.feedburner.com/~r/StudentLoanConsolidationHotTopics/~4/3rcQsgsSKNg" height="1" width="1"/>
Consolidating Your Parent Plus Loan
Yes, you may consolidate a Parent Plus Loan, but there a few things you should know.<img src="http://feeds.feedburner.com/~r/StudentLoanConsolidationHotTopics/~4/m3bbEj1qLLE" height="1" width="1"/>
Stafford Loan Consolidation Rates
Here is my no fluff, naked truth blog stating the cold hard facts surrounding Stafford loans and federal consolidation interest rates.<img src="http://feeds.feedburner.com/~r/StudentLoanConsolidationHotTopics/~4/RB26IRlujaY" height="1" width="1"/>
Why Federal Loan Consolidation is Wrong for You
Consolidation is not always the right move for students, yet they do it anyway. I believe the reason for this is because many students assume consolidation is just part of the financial aid process; that consolidation is the final stop on their debt filled journey. The truth, however, is that consolidation is not for everyone.<img src="http://feeds.feedburner.com/~r/StudentLoanConsolidationHotTopics/~4/WXA_Rgxr70Y" height="1" width="1"/>
My Grace is Almost Up, When Should I Consolidate?
Ah yes, the dreaded panic button has officially been pressed. Those of you who graduated in May are now approaching repayment at mach one speed.<img src="http://feeds.feedburner.com/~r/StudentLoanConsolidationHotTopics/~4/pXur8Pm7QSU" height="1" width="1"/>
Service Deferment and Forgiveness
When many college seniors graduate in May they will be facing a tough job market and student loan bills. Because of this, many soon-to-be college graduates are considering alternative post-graduate options. For students who decide to engage in post-graduate volunteer service there are a few student loan benefits.<img src="http://feeds.feedburner.com/~r/StudentLoanConsolidationHotTopics/~4/z2B8Kis7mW0" height="1" width="1"/>
Do Not Dig Yourself A Deep Debt Hole
Try saying that five times fast!
Do you know what happens when you do not make your student loan payments? Ideally you should take repayment into consideration before you sign off on a loan, however most people do not really think about it until the bills start coming in. The worst thing you can do is [...]<img src="http://feeds.feedburner.com/~r/StudentLoanConsolidationHotTopics/~4/-uCZHk1O1Nw" height="1" width="1"/>
after you have consolidated your student loans. If this kind of work interests you and is available, it could be a better option than loan consolidation.
Another time to hesitate before you choose to consolidate student loans is when you are close to finishing your payments.Stepping up the payments and saving yourself some interest and the hassle of consolidation might be more advantageous to you.
Finally, there are that you might want to keep openbecause they offer special advantages. For example, if you are considering going back to school and you have a Perkins loan,you would not want to consolidate that with your other studentloans.
The government will pay all interest on Perkins while youare in school, but if you have chosen to consolidate studentloans, you will not be able to receive this benefit. You could always choose to leave any special kinds of out of theconsolidation mix, however.
About the author:About the author Mark Kessler..His website is quickly becoming recognized for it's wealth of information and resources oneverything you need to know about student loans. Check it outright away, your bank account depends on it! Go to ==> Student 411
|
