Consolidate My Student Loans: How to Do itAuthor: Torrie Cantor
Lines like I want to consolidate my student loans are mostly heard from recent graduates. If you are one of these young individuals, then you've made a responsible step in repaying your college loans. You're probably much hassled with how you have to make all these monthly payments to several lenders. Either that or you're having a difficulty coming up with the payments on time. Whatever your reason is, consolidating your loans will surely ease your refinancing burden.
Now lies the next step. Before you say "I want to consolidate my student loans", do you know what it really is? Are you aware of the advantages and disadvantages of doing so? If not, then you've come to the right place. This article will give you a brief overview on consolidating loans, pros and cons, and some tips and hints in applying for one.
How does student loans consolidation work?
It's simple. After you graduate college, you have to face the responsibility of repaying all your student loans. By consolidating your loans, you combine all your loans from different lenders into one single loan to be paid to one lender, at a lower interest rate, and maybe with longer time to pay. This will really help you be able to repay your college loans. Also, this can save you thousands of dollars on the life of your loan.
Advantages vs. Disadvantages
Grace Period - If you consolidate your loans during the grace period, which is the 6-month time after you leave the school before you start making payments, you will be able to take advantage of a lower consolidation loan interest rate. However, you will also be forfeiting the remaining grace period and would have to start paying within 60 days.
Tip #1. You can consolidate your loans toward the end of your grace period so you can still take advantage of that free time of your grace period and still enjoy lower rates. Discuss timing with your lender.
Extension of Repayment Period - When consolidating loans, you can extend your repayment period for up to 30 years, depending on your total education loan debt. With this, your monthly payments will dramatically decrease. However, in the long run, it might lead you to pay more interest over the life of your loans.
Tip #2. If you have a difficulty coming up with the monthly payments on time, then you can go for this. If not, then select the shortest possible repayment period that you can afford so you can repay your loan more quickly and save on interest.
Consolidating your loans can really simplify your life. Instead of several monthly payments to various lenders, you only have to make a single payment to a single lender. But, you could also be enjoying some benefits provided by your current loans, like loan cancellation or deferment eligibility.
Of course, the decision if up to you. These are just some things to look out for when considering consolidating your loans. So, now that you're equipped with these information and tips, you can say "I want to consolidate my student loans", and mean it too.
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