When getting out of college many students are faced with the fact that student loan repayment beings shortly there after. Consolidating your student loans down to one payment can greatly reduce the amount of money you will pay on interest alone by a sizeable amount in the long run.
Student loans tend to have a repayment period anywhere form 10 to 20 years. This makes it possible for the parents and students to repay the loan without feeling bogged down. However repaying the loans over a longer period can result in higher interest rates which results in more money out of your pocket.
When applying for a student consolidation loan, you are trying to lower the balances of all your loans into one lump sum payment. Balances from other loans can easily be transferred from one lender to another. Some place to look into in regards to consolidating students loans are Perkins, Stafford, FISL and HEAL. It is possible that some lenders will consolidate the student loan as a private loan as well.
Paying off a student loan in less than 10 years may reduce the monthly payment without extending the overall loan terms beyond 10 years. However, missing just one payment could increase your interest rate on the loan raising your overall monthly payment. It s important to remember that if a student consolidates their loan before they begin making monthly payments, the interest rate could be much lower.
In some cases students have trouble paying off their student loans having just gotten out of college and in search for a nice paying job. There are specific plans that will allow a student to adjust their monthly payments on a sliding scale that start out with a low monthly payment and increase slightly every few years. This student loan consolidation method is quite popular by many since it allows for the low monthly payments initially, giving the students plenty of time to increase their salary over the upcoming years