Student Loan Consolidation Advice
While many college graduates struggle with repayment of their student loans, there is a solution that can help these individuals in easing up on the amount of their loan repayments, as well as the number of actual payments that must be made to student loan creditors each month.
For those who have obtained multiple student loans, a process called student loan consolidation may be a good fit. By proceeding with this type of transaction, the borrower can combine the balances from several student loans into one loan with just one single monthly payment that is due. Oftentimes, this payment can be significantly less than the total amount that the borrower was paying previously.
Considerations with Student Consolidation Loans
When considering the consolidation and refinancing of student loans, there are a number of factors to be aware of prior to moving forward. First, while consolidating one’s federal student loans may simplify the monthly payments, it could also cause a borrower to lose certain government related student loan benefits.
If one opts for a direct consolidation loan, they will be able to combine a number of different federal student loans into just one debt obligation, resulting in one single monthly payment rather than multiple payments each and every month.
However, while this may ease the burden of several monthly payments along with lowering the total amount of loan payments borrowers who refinance their federal funds could lose certain benefits from their original student loans, including benefits that are related to loan cancellation, principal rebates, and / or various types of interest rate discounts.
In addition, although a student loan consolidation and refinance may lower a borrower’s monthly payment amount, it is important to compare the duration of the loan terms. If the single lower payment stretches out the time frame of the loan by a significant number of years as versus the original loan term (or terms), then it may or may not be in the borrower’s best interest to refinance.
One of the best ways to determine whether or not this is advantageous is to add up the total amount of payments in each scenario and see which option allows the borrower to pay less overall. The total amount of repayment could be surprising.
Prior to moving forward with a student loan consolidation, there are other factors that should also be considered, such as:
- Are you still within your student loan(s) grace period or have you entered the repayment phase?
- Have you missed any payments on your student loan(s) and / or is the loan in default?
- How many total student loans do you currently have?
- Are your student loans federal, private, or a combination of both?
- From how many different lenders have you borrowed your student loan funds?
Other Available Assistance
Most lenders offer assistance directly on their websites for potential borrowers who are considering a student loan consolidation. One of the best tools available is the student loan consolidation calculator.
This calculator allows a potential borrower to type in the current amount of monthly payments that they are making on each of their loans, along with the current balances. Once totaled, the calculator will give the borrower an idea of how much savings, if any , both monthly and annually that the borrower may attain by proceeding with the student loan consolidation. For an example of how a private student loan consolidation calculator works, visit here.
Where to Get Additional Student Loan Consolidation Advice
There is a great deal of information available to those who are seeking advice on student loan consolidation. Borrowers are oftentimes encouraged to seek assistance from the government prior to turning to a private lender.
Some of the best government websites for details on these types of transactions include http://loanconsolidation.ed.gov/ and http://studentaid.ed.gov/repay-loans/condolidation. In addition, https://studentloans.gov/myDirectLoan/index.action is also helpful.
If you are ready to proceed with a student loan consolidation through a private lender, you may find an application online.
By filling out and submitting the application form, you can begin the process of combining multiple student loans and their corresponding payments into one convenient loan obligation and one single payment amount.