Guide to Student Loan Consolidation

Today more students than ever are graduating college with larger levels of student debt. While student loans provide an excellent financing tool to pay for the cost of higher education, the cost of repaying such loans following graduation can often be steep for many new graduates, especially when faced with an entry-level salary and the cost of living independently.

The answer for many recent graduates is student loan consolidation. By consolidating or refinancing your student loans, students can essentially roll multiple loans into a single loan with the same interest payment.

Student Loan Consolidation offers Advantages

In addition to getting rid of multiple interest rates and payments, consolidating student loans also provide significant other advantages, such as being able to lock in a lower, fixed-interest rate as well as reduce monthly payments. In addition, it is also commonly possible to choose from a variety of flexible repayment plans, including graduated income sensitive payment plans that allow for interest only payments during the first part of the repayment period. This can be particularly beneficial for new graduates who may have started out making an entry-level salary, but expect to garner higher wages in the coming years.

Most federal loans, as well as private student loans, can be consolidated. Consolidating federal student loans separately from private student loans can provide a college student with some important benefits, such as being able to apply for a forbearance or qualify for a loan forgiveness program, so it is important to keep this in mind. Also, remember that the interest rate you receive for private student loan consolidation will typically be based on your credit score, so it is a good idea to check your score and credit record before you actually apply to consolidate your private student loans. This will ensure you do not have any surprises awaiting you.

How to Consolidate Student Loans

If you have graduated college and are thinking of consolidating or refinancing your student loans, you can ask any lender about student loan consolidation. It can actually be helpful to shop around in order to find the best deal. Some lenders will provide interest rate discounts if you sign up to have payments automatically deducted from your checking account and/or if you make consecutive on-time payments for a particular period of time.

Students are not the only borrowers who can benefit from consolidating or refinancing student loans. Parents who have a PLUS or Parent Loan for Undergraduate Students can also consolidate loans as well, provided their students are still in school.

Remember that student loan consolidation can provide students with an excellent way to responsibly handle their finances and loan obligations.

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