When to Consolidate Student Loans

In terms of the repayment of your student loans, the sooner, the better. However, when is the right time for you to consolidate your student loan?

The Right Period to Consolidate Your Student Loan

In the government consolidation loan program, it is interesting to know that there are actually no deadlines connected to it. It is supported by the fact that you can apply for the student loan anytime during the grace period or even on the repayment period. But to consolidate student loans, some considerations must be paid attention. To consolidate student loans, you should know that it usually take place during your grace period. At this moment, the lower in-school interest rate will then be applied to estimate the weighted average fixed rate to consolidate student loans. And once the grace period has ended on your government student loans, the higher in-repayment interest rate will be applied to estimate the weighted average fixed rate. Given such process, it is then understandable that your fixed interest rate for government student loan consolidation will be higher if you consolidate student loans after your grace period.

And when you are interested to consolidate student loans, you should know that even of your student loans are already in repayment, to consolidate student loans is still allowed and beneficial. It is for the reason that when you consolidate student loans at this time, you already fix the interest rate on your government student loans while the rates are still originally low.

Student Loan Consolidation Offers You a Possibility to Returning to School

Many students and graduates left school for family, career or financial reasons. The odds here are they will want to return to college down the line. However, if they fail to pay on their student loans while they are out of school, there is a great possibility that they can be kept from receiving any financial aid when they return. If financial reasons were part of the primary reason they left school, it therefore implies that digging a much deeper hole will only make it harder for them to come back.

By consolidating your student loans, the loans will also become easier to manage and pay off. And, once the loans are consolidated, you can retain your right for forbearance as well as for deferment. You can even take advantage of income sensitive and graduate repayment options which you may not have encountered before while you’re on your multiple loans.

Student loan consolidation can help most borrowers in many ways. But, it is still necessary to note that rates won’t actually stay low without end. Take the advantage of low interest rate, consolidate your student loan as soon as possible. If you are on your way out of college, saving every cent you can in today’s tough job market is worth considering. And, regardless of the situation you are in to right now, consolidating your college loans is a practical decision.

Student Loan Consolidation

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.

Interest Savings

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.

Student Loan Default Prevention

The defaulted student loans are no doubt a serious problem that must be prevented as possible as you can.

There are several ways that you can make to prevent the onset of student loan default. It is just somehow necessary for you to place your interest and efforts on preventing it. Here are the possible ways that you can consider:

  • Make sure that you understand your loan options as well as the related responsibilities prior to taking out a student loan.
  • Simply make your payments on time.
  • If possible, inform your lender or service provider promptly about any of the possible adjustments that may affect the repayment of your student loan. In case you move or change your address, let them know. Also, make sure that they know about the name changes, which are very possible because of marriage; graduation or termination of studies; leaves of absence as well as transfers to another institution.
  • If certain financial difficulties are encountered, try to consider applying for a deferment or forbearance on your loans. Many experts often suggest that it is much better to defer your payments than to go in to default status. Along with this, ask your lender or service provider about the available options while you are still making payments, before you enter the default status of your loan. Always note that after you default, you won’t be able to get a deferment or forbearance anymore.
  • If for instance you are having trouble making your payments, try to contact your lender as they may be able to suggest an alternate repayment options for you. Some of the possible options include graduated repayment, income sensitive repayment, as well as income contingent repayment. Also note that the types of available repayment options currently depend on whether the student loan was issued under the FFELP or FDSLP or Direct student loan programs.
  • A student loan consolidation can be considered as another way for preventing student loan default. Combine all of your educational loans into one big loan as this gives you the chance to send your payments to just one lender. What’s more, you may be able to extend the term of the loan in order to lessen the size of your monthly payments.
  • Simply keep records regarding your student loans. If possible, try to back up copies of all your letters, canceled checks, promissory notes, disbursement notices, and some other necessary forms in a file folder. Just be organized.

Be aware of Student Loan Default and try to be on the right track for your student loan repayment.