Consolidating Student Loans

Lower Your Monthly Loan Payments with Student Loan Consolidation

Though they can be a great way to finance your education, student loans must eventually be paid back. After graduation, you may find that your loan payments are more than you can handle. If this is the case, or if you just want to save money, you may want to consider consolidating your student loans.

The Cost of Consolidating Student Loans

If you consolidate your student loans, you can significantly lower your monthly payments by as much as 60 percent. Unfortunately, you may end up increasing the total amount that you will pay over the life of your loan. Before consolidating, you should carefully evaluate the interest rate and the loan terms. You should also take time to compare lenders.

Benefits of Student Loan Consolidation

1. Lower interest rate.
Student loan consolidation can save you thousands of dollars. You may be using credit cards with 10% to 28% interest trying to keep up with your bills. This can cost you thousands of dollars when you pay the minimum monthly payments on high interest credit card debt. Having a student loan consolidation may be your best option if you can get lower interest rates when consolidating your student loans.

2.Fixed interest rates.
While the rates on Federal Stafford and Federal PLUS loans vary each year, the interest rate on a federal consolidation loan is fixed for the life of the loan. The interest rate on your student consolidation loan would be a weighted average of the interest rates on your eligible loans rounded up to the nearest 1/8th of a percent.

3.Life-of-loan servicing.
Some student loan companies offer life-of-loan servicing, which means that the servicer will guarantee to never sell your loans. You will remain with that servicer for the life of your loan. Be sure to research student loan companies to see which ones offer this benefit.

Lastly,
Taking out a student loan consolidation loan is a big step and should be taken carefully. Many people will simply view a commercial on television or hear about a consolidation company and go straight into the application process without a second thought.