Consolidating Student Loans Guide

Consolidating Student Loans Guide

Student loans can be a real burden on you. You seem to be put under this impression that this massive investment into your education will somehow pay for itself the moment that you graduate from school…but this isn’t always the case. A vast majority of people who took out student loans, while they were in college, are still paying them off while in their 40′s and even 50′s.

In order to make things more affordable and manageable for these people, there are programs and lenders which will help you to consolidate your student loans into one single loan and thus reduce your interest payments. Since student loan interest rates can be so astonishingly high, this is an extremely smart move and can easily reduce the amount of stress in your life.

Welcome to Consolidating Student Loans Guide. On this website we will help you to find alternatives to paying off your current student loan debt, educate you on student loan consolidation, and even tell you great ways to make things cheaper, and save you a ton of money in the process.

Basically, we will do the research so you don’t have to. We want to help you, and you want to save money. With student loan consolidation rates varying from one lender to another, we want to make finding the best lender as easy as possible, and will guide you in the direction to doing so. Before we begin, let’s get some basic background understanding of student loans and what student loan consolidation actually refers to.

How Do I Know I Need To Consolidate Student Loans?

Consolidating student loans is only done when you have multiple loans at the same time. Typically, student loan consolidation lenders will not allow anyone to consolidate student loans while they are still using the loans (i.e. still in college).

Once you are out of college, however, it is okay to begin looking into different consolidators and finding which one will best serve all your needs. You may want to consolidate student loans if you:

  • Have multiple student loans
  • Have different interest rates on each student loan
  • Want lower monthly payments on your student loans
  • Need to save money on the total interest of the combined student loans

If you fall under any of the above criteria for your student loans and current college loan interest rates, then it is a good idea to look into consolidating the student loans into one large loan.

How Do Student Loans Work?

As a borrower of the loan, you are subject to many different types of background checks to determine how reliable you actually are, and how much you can be trusted to pay the lender back, in full. These background checks look over everything from credit scores to current salaries to current debt that you may have already accumulated. In doing this, lenders (banks and/or private lenders) can get a pretty good understanding of who you are, and if you can pay them back or not.

In our current economy, getting a loan is more difficult than ever before, and the slightest ding in your history can prevent you from getting anything altogether. Before looking into a student loan, it is important to obtain your own credit history and information, and take action to fix any problems that may be on it. Literally anything can and will be used against you when applying for a loan, so being “perfect” is almost necessary.

What Does Student Loan Consolidation Mean?

Student loan consolidation means that you are basically combining all of your student loans into one big loan. A student loan consolidation lender will pay off your existing, outstanding balance, and then add all of that up into one total loan which you now pay off. When these lenders do this, they can save you thousands of dollars in interest by giving you much lower interest rates, and by giving you only one interest rate and monthly payment to worry about. You can consolidate as many student loans as you want.

For more information on consolidating student loans, feel free to browse our articles until you feel comfortable that you know what you’re getting into. Our articles are all based around real world scenarios and questions, and we do our best to give you as much information as possible for a full understanding of student loan consolidation.

College Grads Are Consolidating Student Loans

As the excitement of college graduation begins to fade, graduates are faced with the reality of paying on their student loans. In general, student loans have a brief grace period before repayment must begin. This can often occur before the graduate has even secured consistent employment, creating a difficult financial situation. As payments become due on various loans carrying a variety of interest rates, this school debt can become overwhelming.

Many of these college grads are consolidating student loans to reduce payments and create a better financial future, especially as they start out. Consolidating student loans, as with any other loans, allows the borrower to eliminate multiple payments each month, lower interest rates, and more importantly, lower the monthly payment. Some consolidation programs also provide deferment options and flexible repayment options.

Federal Education Loans can be consolidated into a Federal Direct Consolidation Loan. Private loans that may have been obtained over the course of a student’s education cannot be consolidated with the federal loans, however. Due to the downturn of the economy, very few lenders are offering student consolidation loans. Four lenders that do offer this service are Chase, NextStudent, Student Loan Network, and Wells Fargo.

Student consolidation loans do not carry fixed interest rates, which may result in an interest rate increase during the period of repayment. For a graduate with a steady income and good credit, securing a personal loan from a bank or credit union may be the best option to consolidate these loans. A personal loan will provide the stability of a fixed interest rate.

It was once thought that you could quickly pay down student debts by securing a great job with a good income. With college tuition on the rise, many graduates find themselves paying these loans for many years, often into their 40s. By consolidating student loans, graduates can manage their debt more effectively, creating a brighter financial future. It is imperative that graduates and students are proactive in debt management to avoid default.

As with any financial move, graduates should take the time to research the options, understand their financial situation and make the decision that will best move them toward financial freedom.