CONSOLIDATING STUDENT LOANS COULD SAVE YOU MONEY
are a college graduate, hopefully you are smarter, wiser and have
landed a better job because of the experience. But like many recent
college grads, you may also have racked up a mountain of student
loan debt. In fact, the average student loan debt among college
seniors is $19,237, according to a 2006 study by the National Center
for Education Statistics.
Consolidating student loans may be
a great way to manage your debt, lower your monthly payment, extend
the duration of your loan and enable you to pay a single lender,
rather than making payments to multiple lenders.
many other things in life, you only get to do it once, so before you
consolidate student loans, you should ask yourself the following
Is consolidation right for me?
student loans is not for everyone. If you are already repaying your
loans and owe just a few thousand dollars, you may not want to go
through the hassles of loan consolidation. Sometimes lenders offer
benefits such as reducing your interest rate for paying on-time,
which you could stand to lose if you consolidate your loans with a
different company. Carefully research how much you are currently
paying, what your new payments would be if you consolidated, and the
terms of your loans. In some instances, you may be money ahead if
you stay with your current lenders.
Can all of my loans be
While you may have multiple student loans,
it is important to remember that there are two major types of
student loans- government loans and private loans. Government loans
can be consolidated with other government loans, and private loans
may be consolidated with other private loans. However, government
loans and private loans cannot be consolidated together. The major
terms for federal loan consolidations are determined by the federal
government and described below; terms for private loan consolidation
vary from lender to lender. You may want to check with a loan
counselor before consolidating private loans.
Does it matter
where I consolidate student loans?
You can get a federal
consolidated loan directly from the Department of Education or from
any private lending institution with government approval. While the
federal government regulates the major terms of federal
consolidation loans, not all of the programs are created equal. Some
lending institutions may offer an interest rate reduction for
on-time payment or signing up for automatic withdrawal, while others
may offer different repayment options.
What do I need to
consolidate student loans?
While the application form may vary
slightly depending which financial institution you use, you should
be prepared with your loan records, including your account number,
balance owed and the name address and telephone number of the
lender. Many consolidation applications will also ask you to provide
references, as well as the name and address of your current