Consolidating Student Loans- Things to Consider

It may be a good option for you to consider consolidating student loans. That is if you want to have the convenience of making only one monthly payment. Depending on the terms you settle for, you may also be able to lower your monthly rates and extend your payment period. Sometimes though, combining student loans may not be a good idea. Find out first if college student loan consolidation is a good step for you.


Different Loan Types

You may be encouraged to combine your loans because it is a convenient option. You should however assess first if the convenience you get from consolidation outweighs some possible disadvantages. One major disadvantage is the loss of federal loan benefits. Merging federal loans with private loans means your government loans will take on completely different terms. Some benefits which may disappear include fixed interest and tax deductibles. If you want to preserve the benefits of federal loans, then you should consolidate them separately.

Grace Period Option

Some loans have a grace period after college in which payment will not be immediately required. College student loan consolidation may be performed during this period. The advantage to this move is that you may be able to fix your interest rate for the duration of your payment period. This may not be a good option for you though if you cannot afford to immediately make payments. In a lot of cases, consolidating shortly after graduation would also automatically strip you of the remaining grace period. You would be asked to pay as soon as consolidation is done.

Payments On the Dot

Common sense should tell you that consolidating student loans also means paying on time. You should realize though that prompt payments are even more significant with consolidated loans. When you combine your loans, it will reflect on your credit record. This in itself will seemingly improve your credit record because you only have a single loan on record. Paying on time however, will improve your record even more. What this means for you is that you have a better chance of getting approval for other loans after college. Lenders like good clean records that show minimal loans and prompt payments.

Various Payment Period Options

There are different payment period choices for you to make for college student loan consolidation. At the most, you can extend your payment period up to three decades. This will allow you to earn the cash you need to pay your debts. This option will also normally lower your monthly rate to an affordable one. Whenever possible though, it still makes a lot of sense to settle for shorter payment periods. This is because longer payment schemes mean a higher overall accumulated interest rate. You would be better off saving the cash you pay for interest.

Consolidating student loans truly can provide great relief to many college graduates. You would however have to determine first if your personal circumstances fit this option.