Federal and Private

Student Consolidation Loans

By Sam Ferdi

Consolidate Student Loans

Definition:

A student consolidation loan is nothing but a simple replacement of multiple loans with just a single loan. Sometimes the debt burden for the student loan becomes a key problematic issue for the future of the student. Usually the student loan is comprised of both federal and private loans, but it is always advisable to the students to consolidate the federal loan first and then the private loan.

Keep your Government Loans and your Private Loans Apart
Federal student loans usually come with many benefits you surely want to keep. Use private consolidation loans only with private student loans.

If possible, consolidate all your variable rate loans into a single fixed interest student consolidation loan and leave fixed interest rate loans aside unless you can get a significantly lower interest rate with the consolidation loan.

Federal Stafford loans, Federal Direct Loans, Federal Perkins Loans as well as many others can be consolidated. Most of the time, they already have low rates.

Student consolidation loans will have fixed interest rates which are similar to those of the loans that are being consolidated.

Student loan consolidation can reduce payments by up to 60 percent. Actual amount saved will depend upon the existing loan interest rates and the term of the original loans. Typical student loans are for a 10 year term.

Why consolidate your student loans and what to take into consideration.

• Lower monthly payments.
• Have simple and convenient loan payments, one loan payment and one check to write per month.
• Have fixed interest rates. You can check online to calculate the interest rate on a new student consolidation loan based on the rates of your current student loans. Even though you can get lower interest rate with a student consolidation loan, the repayment period is usually longer.
• Payment period can be extended. You can then give attention on earning money rather than making several monthly student loan payments.
• In school consolidation arrangements.
• Credit Rating. Your credit rating will also determine the interest rate you have to pay for your consolidation loan. The higher the credit score, the lower the interest rate.
• Income minus Expenses. You need to evaluate your current income minus your expenses to determine your net income surplus each month.
• To get a student loan consolidation, you can still be enrolled in school or graduated.

Advantages

• You will have a single loan payment which is often lower than what you currently pay and is easy to set up
• It will help lower your debt burden.
• You can secure the lowest interest rate at the time.
• It can help you qualify for new or renewed deferments.

Options of paying back.

• Pay a standard amount each month. This will include principle and interest. This is the lowest cost of interest paid way to go.
• Graduated repayment. Here you start with lower payments that are only interest, but then they will keep increasing.