Consolidate my student loans – Why Consolidate My Student Loans?

Posted by admin on December 16, 2010 under General | Be the First to Comment

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Why Consolidate My Student Loans?

After graduating college many students that carry student loan debts ask the question why I should consider consolidating my student loans. There are many answers to this question that define the purpose of student loans and the process of consolidating my loans.
Unfortunately, a lot of people end up leaving college with burdensome debts. This debt often consists of multiple loans from different lenders. This means you have to deal with a bunch of different repayment plans that and policies each month. It can be very confusing and expensive this way. The solution is loan consolidation.
When I consolidate my student loans, it means that I group all my outstanding loans into one single debt with just one lender and one repayment plan.
When you consolidate your student loans, the balances of your existing loans are paid off by the consolidation agency. Then the balance rolls over to this single institution. From there, you can focus on your debt in a more manageable setup.
Loan consolidation offers many benefits. You can lock in a fixed interest rate for the term of your loan. These rates are usually lower than what you would have been paying, and this can save you a lot of money over time. You could maybe even save thousands when all is said and done.
Another reason why else to consolidate my student loans are the low monthly payments that can be made with the consolidation agency. Most agencies are very helpful to establish an affordable budget to pay off your loans and fit your lifestyle.
How I save when I consolidate my student loans will depend on what interest rate I have and whether I decide to get an extension for my repayment plan. Generally, consolidating student loans can re
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duce monthly payments by up to 54 percent. Of course, that means you are extending your repayment plan and building up more fees in terms of interest.
Always paying a little extra each month will reduce your debt early. No penalties will occur if you decide to do so. If you decide to pay more on your loans each month then expect to have fewer burdens in the long run. More on this subject can be found on the internet, so be sure to check around for helpful decision making progress.

By: Norman Harris

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Afteryou decide to make multiple payments on your student loans, Please read Norman’s advice on Student Loans Consolidated, and Student Loans Consolidation Advice

If you graduated in the spring, or will be graduating this spring, now is the time to look into consolidating your student loans. Although your school gave you some information when you took out your loans, they may not give you the full scoop on consolidating after you graduate. If you’ve been wondering, “How do I consolidate my student loans?” keep reading to find the answer.

Student Loan Consolidation Offers

Until mid-2007, most people with student loans received numerous offers to consolidate their debts. Due to a change in Federal lender subsidies, many of these solicitations have stopped, but that doesn’t mean you can’t consolidate your college loans.

Consolidation Eligibility

If you have Federal Stafford, PLUS, or Perkins loans, you can consolidate them together. Private loans may be eligible for consolidation, but not all lenders agree to become part of a consolidation. In most cases, it’s not possible to combine federal and private student loans due to the differences between loan terms.

How to Consolidate Student Loans

Consolidating Federal loans is a fairly straightforward process. Consolidating private loans is more difficult, but it can be done.

Consolidating Federal Student Loans

1. Gather your loan paperwork for all of your loans. Depending on the cost of your school and the number of years you accepted loans, you will have several individual loans. Most students have both subsidized and unsubsidized Stafford loans for each year. You may also have Perkins loans or PLUS for each year.

2. Contact the primary lender for your loans. Depending on your school, this may be the Federal Direct loan program, or an individual.

3. Ask about any additional offers for rate reductions with automatic payments or following a certain number of on-time payments.

4. Research terms available from other consolidation lenders online to see if anyone offers a larger discount for automatic payments or an additional discount after 36-48 on-time payments. Due to the recent changes in funding, most lenders now offer a quarter percent reduction for automatic payments. A few also offer a quarter percent reduction after 36 on-time payments, but these offers are harder to find.

5. Choose your lender and sign the paperwork. Your old loans will be paid off and you’ll now receive payment instructions for your new consolidation loan. Sign up for automatic payments promptly. There may be a one-month delay before the program takes effect, so be sure to make on-time payments for that first month. If your grace period expires before you file for consolidation, make sure to make the payments until the consolidation process is completed.

Consolidating Private Student Loans

1. Private loan consolidation is more difficult to find, but it is possible if you have a large number of loans.

2. Gather your loan documents.

3. Research private consolidation lenders online for minimum loan balance and interest rate requirements.

4. Contact your current lenders to ask about consolidation offers.

5. If you are eligible for consolidation, ask about discounts for automatic payments. A few lenders offer them, but they’re harder to find due to the change in funding laws.

Benefits of Consolidation

The primary benefit of consolidation is simplified payments. Rather than five, ten, or more payments every month, you have just one or two payments to make. Without automatic payments, you never have to worry about missing a payment.

In most cases, consolidation stretches the term of the loan, so you may actually pay more in interest over the life of the loan. If possible, try to accelerate your payments as your income grows to avoid paying additional interest. However, any discounts you receive for consolidating student loans will reduce the total interest you pay over the life of the loan.

Finally, consolidating student loans makes it easier to keep track of your total annual interest paid. That figure is important if you’re eligible for the student loan interest tax deduction. Although the deduction won’t save you a lot of money, every little bit helps.

For more articles on Consolidating Student Loan, visit: http://www.bills.com/consolidate-my-student-loans/

Justin has 5 years of experience as a financial adviser; his key areas are loan consolidation, debt relief, mortgages etc. For more free articles and advice visit http://www.Bills.com

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