This article talks about Student Loan Consolidation Options.
Getting out of debt, the sooner, the better
It was reported by the Public Interest Research Group in the US that the average debt among student borrowers is currently in excess of $16,500. The Associated Press also noted that graduates of public colleges and universities usually emerge owing more than $10,000 for their undergraduate years alone. Those who are in private institutions typically owe $14,000, while the graduate-level students often owe more than $24,000. For those studying medicine or law, they accumulate even more debt.
The repayment of ample student loans is not a easy task for both students and their parents. Repaying these debts are even becoming more difficult for graduates in the midst of uncertain jobs and the recession.
With the interest rates in all student loan programs are now at record lows, there is no reason for the graduates not to consider student loan consolidation. It is often said that with student loan consolidation, students and graduates can save thousands of dollars in interest charges.
Now let us look at the things involved in student loan consolidation.
What is Student Loan Consolidation
Student loan consolidation is typically defined as the process or the act of combining multiple loans into a single loan in order to decrease the monthly payment amount or elevate the repayment period. There are a lot of reasons to do it, and among those is money saving payment incentives, decreased monthly payments, fixed interest rates, and new or renewed deferments.
The benefits of student loan consolidation
Student loan consolidation has a lot of benefits.
Over time, the student loans you have borrowed have been assigned with different variable interest rates. Note that the key word here is variable. While the loan you received may have offered, say, 3.5 percent at first, the rate will actually go up as the interest rates go up. So, if you have two or more of these loans, there is a great possibility that you may have owed amounts at different rates, and these rates can rise and fall yearly. Considering that the interest rates have nowhere else to go but up, it is no doubt a safe bet that the debt you have accumulated will mount faster than it would if you consider a student loan consolidation.
By considering consolidation and remaining on your 10 years payment plan, it is possible that you can lock your interest at today’s current loan rates and save some bucks over the long haul. Aside from that, all of those loans that may have come from different lending companies or banks can be a burden to deal with. So, if you consolidate, it means that you only deal with one single company and one payment rather than several. Other than that, you have the great chance to receive added bonuses like payment and interest rate reductions in case you pay your debts on time over a period of months. These benefits are also possible to come if you have automatically withdrawn your monthly payment from a checking or savings account.
Gain More Student Loan Consolidation Options By Improving Credit Score
By considering Student Loan Consolidation Options, borrowers not only save or reduce their long term debt but can also help change their credit score for the better over time. It is worth noting that an improved credit score is a very important factor when a person enters the “real” world and wants a new car, apartment or credit card.