Attending college is a fantastic experience. It’s a totally unique experience from high school, especially if your college has a large campus. There are many different activities that colleges offer students, far more than any high school can. Also many new people to meet, from all over the world. Going to college can be wonderful.
But it can be a pain too, if you have to pay for it. And if you needed to fund your tuition and other expenses with student loans, then it becomes really painful when you have to start paying those bills. Plus you have to pay the interest on what you borrowed too.
If you are in this fix, where you know your bills and interest will be too high, then there is one sensible idea to try. You can consolidate your student loans. Doing so will allow you to minimize your payments and significantly reduce your interest rate.
What often happens with college students who have taken out loans, is that they forget about them. It’s not hard to understand though, because college life can be so hectic. When diploma time comes, the loans are all but forgotten. That is, until the bills start coming in.
These same students also forget that they may have borrowed money from more than one lender. So after school they start getting bills from all over. And then life gets really hectic, keeping all the bills straight.
But to assist in this problem, students look to student loan debt consolidation. Then their monthly payments can be merged into one smaller monthly payment.
There are several loan consolidation services that can be found online. One such service is at NextStudent.com. They have a very informative website, and offer free one-on-one counseling, as well as low interest rates.
There are several student loan debt consolidation sites on the web. If you are in a bind with trying to pay your loans, then please do a search online right away, I’m sure you’ll find a service that will dramatically improve your financial circumstances.
By: Jim Konerko
Posts Tagged ‘Consolidate Loans’
Smart Student Loan Consolidating
February 4th, 2010When Should You Consolidate Student Loans?
February 1st, 2010
If you have just graduated from college, the likelihood is that
you are under a large amount of debt in the form of student
loans. You might be wondering if there is any way to reduce the
amount you have to pay. One solution for reducing your
debt is to consolidate your student loans.
Student loan consolidation is similar to refinancing a house on
better terms: although the principal of the loan will not be affected,
the interest rates you can lock in when you consolidate student loans
to a fixed rate can be substantially better, reducing your monthly
payments by up to forty percent. Plus, you might be able to stretch
out your payment time to reduce 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 making your
payments right away. This can be difficult if you have not found
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 pays off
your government loan and issues you a new loan under its own name.
The typical way to determine the interest rate on the new loan is to
take the average interest rates on all of the student loans, 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 like a
good reason to consolidate student loans, this rate is fixed over
the life of the loan, whereas the government rates will fluctuate.
Since rates are at an all time low right now, locking in the current
rates might be a good idea.
Furthermore, many banks 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 a checking or savings account, whereas
others drop the rates after a 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, 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 loans that you might want to keep open because
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 student loans.
The government will pay all interest on Perkins
loans while you are in school, but if you have chosen to
consolidate student loans, you will not be able to receive this
benefit. You could always choose to leave any special
kinds of loans out of the consolidation mix, however.
By: Mark Kessler