Consolidating Your Student Loans
The average college student’s schedule is hectic with tests, work, a social life and studying time that thinking of their student loans is the least of their worries. However, six months after graduation it will be time to start paying back those loans you took out. If this is your situation you may want to consider consolidating your loans under a consolidation program.
How does a student consolidate their student loans? The student can get a student consolidation from the federal government and they can apply online. If the loan or loans are through a bank or institute they should discuss the options with you. The online application will take some time to complete so make sure to follow every step and gather the necessary items.
Items needed to complete the online application:
- Last monthly billing statement
- Quarterly interest statement or yearly statement
- Coupon book
- Web address of loan provider
- School’s financial aid office
Consolidating student loans will vary from bank to bank. It is recommended to consolidate with the bank that the loan was from. A word of caution, each lender has their own set of requirements for the consolidation application and process.
Private lenders can offer alternatives that may ease the financial burden on the graduate but may come with hefty terms. Graduates should be aware of their financial limitations before seeking consolidation loans from either the government or a private lender. The time to consider a private consolidation other than immediate financial problems is when your credit score is high and your debt to income ratio is low.
Disadvantages Of Consolidating Loans (Federal And Private):
- Interest rates increase
- Loan amount size is increased
- Loan period increased
- Losing benefits from lender
- Repayment of benefits
The student can have consolidating student loans repayment schedule extended until the loan is finished. It’s important to examine your options before proceeding with a student loan consolidation program. Be sure to examine current interest rates and how it measures to the consolidated rate, if there are prepayment penalties, what benefits are gained or lossed by consolidating and how much more time is needed to finish off paying the loan.
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