The Advantages of Student Loan Consolidation
It is common for most graduates to leave school with thousands of dollars of debt. Even those lucky students who had scholarships or grants often find that this financial aid was not enough to cover all costs, and were forced to take out loans to cover the cost of books, rent, medical care, and other expenses. This can put a tremendous burden on graduates who are often still looking for a job or just getting started working in a low paying, entry level position. If you have borrowed from more than one lender, things are further complicated by the need to make several different payments each month. One of the best solutions for a borrower in this situation is the student loan consolidation option.
With student loan consolidation, all of your loans will be combined into one. This gives you the convenience of making only one payment a month. Consolidation may also provide an opportunity to receive a lower interest rate and extend the length of the loan for as long as 30 years. Interest rates recently dropped to an all-time low, but they are rising again. If you think consolidation might be right for you, act soon before they go even higher. Consolidation usually means significantly lower monthly payments, and this is perhaps the primary reason most people combine their loans. However, keep in mind that the longer you take to pay off the loan, the more it will cost in the end.
Many banks offer student loan consolidation services and the competition for new customers is intense. This has resulted in a number of attractive enticements for borrowers including:
●A weighted repayment schedule, so the borrower will pay a minimal amount during the first few years of the loan, and then gradually make larger payments in the later years.
●A reduced interest rate if the borrower agrees to automatic withdrawals from a bank account to make all payments.
●A reduced interest rate if payments are consistently made on time.●Forgiveness of part of the total loan if payments are consistently made on time.
●In most cases, you will not be able to consolidate loans until you have graduated and are ready to begin repayment. Other conditions may apply depending on which lender you choose.When looking for a consolidation plan, be sure to check with as many lenders as possible. You can inquire at your local bank, but do not forget to search the Internet. Most of the major lenders have web sites and heavily advertise on the Web. There are many programs and special offers, so it really does pay to shop around. Consolidation is not right for everyone, but finding the best program for you can potentially result in savings of thousands of dollars over the life of a typical student loan.