Consolidate Your Student Loans
So now that you have graduated you find yourself in the same boat as many other recent grads You have a number of student loans, the terms of which require you to start repayment upon graduation, and you have no job. Or you may have a job, but the prospect of managing so many different bills with different variable interest rates which adjust at different times is just too overwhelming to handle. Student loan consolidation may be just the answer for you.
Consolidated student loans, like any consolidated loan, are a way for you to cut your monthly expenses. The way this works is that you work with a financial institution to create a new loan for yourself. In turn, the financial institution works with your creditors. They either buy your debt outright, or they negotiate payment terms with your other creditors. You are responsible to pay your new loan to the financial institution. Typically, your monthly payments will be lower, but the terms of the loan will be longer. This means you will probably be paying more interest over the life of the loan, unless your interest rate is considerably better with the new loan.
Another reason to reconsider consolidating your student loan is that you may be able to get a better rate now than when you originally obtained your loan. If your credit score is better today than it was when you signed your loan documents, you can expect to get a better interest rate and more favorable terms at the time of consolidation.
Many student loans have what is called a grace period. The grace period is a specified umber of months after graduation in which you are not required to begin repayment of the loan. Typically your interest rate is lower during the grace period, so if you are considering consolidating your loan, this is a good time to do so. However, keep in mind that consolidated loans typically force you into immediate repayment, even if your grace period would otherwise continue.
If you decide that you need or want to consolidate your student loans, it is important to carefully research the loan agencies you are considering. You school will be able to assist you through their financial aid office. They may even be able to suggest a number of different lenders for you to consider. Just make sure to do your due diligence. Check the lending agencies out via the Better Business Bureau, your state Attorney Generals Office and do an online search. If there are consumer complaints, you will easily turn them up via these avenues.
You should also check with your original lenders. They may be able to consolidate your loans for your. Do not feel obligated to go with them however. You may do better with another financial institution. Shop around. You are looking for the best terms you can find.
When comparing consolidated student loan options make sure to consider the fees along with your new monthly payment and interest rate. Look for hidden fees and prepayment penalties. These items can make add up quickly resulting in a more expensive loan than you thought you were getting.
Consolidated student loans are the answer for many students. A consolidated student loan can be a good way to keep your monthly expenses more manageable. But before signing on the bottom line, do your homework. Research your lender beforehand and make sure you understand the terms of your loan.