Student Loan Consolidation
So what is Student Loan Consolidation? Student Loan Consolidation is when a student who has taken out several smaller loans will take out one larger loan from a single lender in order to pay off the smaller loans. This means that instead of paying off multiple smaller loans the student only pays off one slightly larger loan. This can allow the student to make alternative repayments plans which makes making monthly payments much easier.
Who can consolidate and when? The people who are capable of consolidating are graduates, those who leave school, and those who drop below half-time enrollment at their school.
The positives of consolidating: Like with anything there are pros and there are cons. When it comes to Student Loan Consolidation, here are a few of the positive aspects. First off there is no extra cost to consolidate, you only take out the loan you need to pay off the others. Secondly, you can end up paying less on your loans by consolidating because you can lower your monthly payments; consolidating allows you a longer time to pay off your loans. Thirdly, there are many other different payment options that can help you save money.
But be careful! When you consolidate there can be a few snags in your plan. If you chose to consolidate make sure to compare your monthly payments to what the possible monthly payment plans could be with the new consolidated loan.
Things you should be aware of when considering a loan consolidation: After looking at the positives, you need to look at some of the down sides, or cautious areas, of Student Loan Consolidation. To start with is that your loan rate could increase! This is advised against because then you would not be reducing how much you pay which can be one of the great positives of consolidating. Next thing to look out for is that you could end up paying more because you were allowed to pay off the loan over a longer period of time. You pay more because the interest did not stop on the loan so while you had more time to pay you ended up paying more on the consolidated loan. Lastly, you should consider what would happen if you lost borrow benefits offered with the original loans. Some of these benefits include: interest rate discounts, principal rebates, or loan cancellation benefits. With benefits like those you significantly reduce what you pay on the loan and losing them could cost you big time!
Some tips to help you figure out what the best path will be is to look around and see what the benefits of getting a consolidated loan could be compared to what you are doing now and with what different places have to offer you. Also, make sure to look for things like interest rate and if it will change, benefits from the new loan versus the benefits you already have, and that you won’t end up paying more in the long run. When your interest rates are not held to a specific percentage or do not have a stopping point your consolidated loan will not save you. Another tip is to make sure you watch out for tricks! Private loans are trickier; some years they can save you a lot of money but other years they can really hurt you financially. Private loans can also be tricky because some require credit checks, but if consolidating with someone that requires credit checks is the best choice for you make sure to get a co-signer! They can help you get the loan you need so you can get the help to pay off your loans and start your life!