Student Debt Consolidation Loans

The Benefits of Student Debt Consolidation Loans

As a graduating senior, the end of college is somewhat bittersweet. On one hand, you’re free to start a new chapter of your life, striving towards success. On the other, you finally have to start repaying all of those loans. Coming right out of college, those multiple monthly payment may seem unbearable. To deal with it, consider student debt consolidation loans.

In order to get started, you take out a new loan, which will have a low interest rate. You use this money to pay off the existing, expensive, student loans. Then all you have to worry about is a single monthly payment that’s very manageable.

There are two types of consolidation loans. The first is federal based, and is available to anyone who has federal student loans. These loans are funded by the government and then issued by private lenders. It’s completely free and there’s no credit check or co-signer required. The interest rate is calculated by taking a weighted average of your current rates. Federal law prohibits the rate from exceeding 8.25%. With this service, you can lower your monthly payments by as much as 60%.

The second type is private consolidation loans. Those that don’t qualify for federal consolidation can take advantage of this. Like other loans, there is a required credit check and associated fees. You have the option to use a co-signer though, if you don’t qualify for the loan on your own. Generally, these private consolidations come with a low fixed rate guaranteed for a year. After that, you’ll have a competitive variable rate. In the first year alone though, you can save up to 45%.

The basic qualifications for these consolidation loans are straightforward. First of all, student loans must not have been consolidated already. Also, you can’t still be enrolled in school more than half time. The loans that you wish to consolidate must be in a grace or repayment period.

You can also control how long you’ll be repaying your consolidation loan. If you want to save money by avoiding interest expenses, you can decide on a short time frame. On the other hand, if you were struggling to meet monthly payments, and have a large amount of debt, you can extend your repayment term up to 30 years. This option makes monthly payments very reasonable.

Perhaps the greatest benefit of choosing to consolidate your student loans is the freedom to spread your money around. Perhaps you have other loans that need to be paid off as well. By lowing the payment on your student loans, you can focus on paying off other debts as well. You also have the choice to save more or even invest some money.

Overall, student debt consolidation loans may be your saving grace. Graduating from college should be a happy time, without financial worry! Spend your time exploring your possibilities and following your dreams. Paying off your student loans will be easy to manage and financially reasonable with consolidation. The benefits speak for themselves.