Student Loan Consolidation

Chances are if you attended college that you probably are left with some sort of student loan debt. Each year you take out loans, it is a new and unique loan that helps pay for your tuition and living expenses. When it is all said and done, though, one of the best ways you can save money is through student loan consolidation. In a student loan consolidation you get a loan that pays off, in full, all of your previous loans so that you have one loan locked in.

Student loan consolidation is a mystery to many college students and graduates. The truth is, though, that consolidating loans can save you a lot of money. In addition, you can pay off your debt faster so that your college years are not chasing you into your retirement years. What a relief loan consolidation provides students with.

There are plenty of ways you can get a loan consolidation. You can borrow from the federal government, a bank, or a private lender, but no matter what you choose to do; consolidation will go a long way in getting you out from under your college debt. The idea is to be making only one payment per month so that you can both pay your debt off faster and with lower monthly payments than you might have ordinarily.

It is a fact that almost two thirds of all college students graduate with some level of student loan debt. The average debt approaches 20,000 dollars. That means there is an entire population of young people with serious debt and no education about how to deal with it. Most do not know it, but the truth is that many of those students would be well served to consolidate those loans while they are still in school.

Despite what many believe, student loan consolidation does not have to wait until after college. In fact, there are many benefits to be had by consolidating while you are still in school. Consolidating student loans while in school can actually lessen the debt before you even start paying it off. That, though, is just the beginning.

Another advantage of consolidating student loan debt while still in school is that you avoid any future hikes in interest. In July of 2006, the interest rates for federal student loans went up drastically. There is nothing to prevent such hikes from taking place again. The sooner your debt is consolidated and locked in, the less likely you are to be a victim of a quick rate hike.

As with anything, you should make sure that consolidating student loan debt before you graduate will work for your specific situation. In most cases, though, it is a good and sound financial move. Lightening your debt before you are even paying it off is a big benefit. In fact, it can be the difference in paying off your loans in 10 years or 30 years.

Consolidating your student loan debt can do more than just reduce your long-term debt. The fact is that a consolidation can help you increase your credit score over the course of the loan. That, in turn, will help you buy a better car, get the home you want, or end up with a lower rate credit card. How, though, is it that a consolidation of student loan debt can help you raise your credit rating? Consider some of the credit rating measures used by the reporting agencies.

First of all, the more open accounts you have the lower your score will generally be. Over your student life, you will take out as many as 8 loans to pay for your education. Each of those is listed as a separate account with its own interest, payments, and principal. When you consolidate, you are closing those accounts down to one account. So instead of 8 open accounts, you have one. That right there will help you score.

Secondly, you will have lower payments after you have consolidated your student loans. When the reporting agencies figure your credit score, they do so by looking at what your minimum monthly payments are. Instead of having several payments per month for your student loans, you have one payment that is less than the sum of those old payments. Again, the consolidation helps your score.

As a final point, you are improving your debt to credit ration. When your score is figured, the reporting companies will check your debt by looking at available credit versus credit used. When you have more credit available, but less used (like when you consolidate student loan debt) then you are looking at a higher score. So, if for no other reason, consider consolidating to help your credit score.

As you near the end of your college career, you have undoubtedly received a number of flyers, mailers, and emails about consolidating your loans. Every company has one reason or another that you should go to them for your consolidation. However, you should be aware that there are often times catches to go with all the promises. Understanding these catches can help you prepare to make a wise decision about your consolidation loan. Don’t fall for the fist consolidation bargain that falls into your lap. Carefully consider the options that are being handed to you.

One perk you may be offered is the all so common discount. They will tell you that if you make a certain number of payments on time you will get a discount. The only problem is that to keep your discount, you have to make on time payments for the life of the loan after that. That can be as many as 20 years. One late payment by one day during that time and your “discount” is gone.

Another way to get caught on a perk is when you get the offer of an all in one consolidation. In such a loan, the company offers to take in all of your debt, including credit cards, car loans, and any other debt you have. It is tempting to have everything wrapped into one loan, but you will lose the ability to forebear or defer your student loan. The loan will no longer be protected as a student loan.

As a final point, beware of changing your email address or moving. One or two misdirected letters, or worse, misdirected emails and a loan company may make you pay the price. You could lose a discount or be charged excessive fees. So be aware of any company offering to work with you strictly through email.

It is important to be familiar with what you are entitled to under the High Education Act. There are certain benefits to getting a federal student loan and consolidating it. Be aware that many consolidation lenders will offer these as special perks that are being given away. They are, in fact, offers they have to make. Consider some of the most common ones.

Ever gotten a letter advertising how great it is that a company is willing to offer you a fixed interest rate? If you have, it is not surprising. In fact, they should all offer you a fixed rate under the High Education Act. This is not an extra benefit, just what you should expect. Don’t fall for the line that you are being offered more than what you really merit.

Another that you may see is that there will be no credit check. Again, this is not only common, but also required. All consolidation companies working with student loans have to do so without a credit check. Knowing what a company is required to offer you can help you determine if the institution is really offering you a bargain or if they are misleading you into believing that you are getting a real bargain, over what you are required to receive by law.

As a final point, you should never have prepayment penalties. No matter what the company advertises, they will all consolidate your loans without prepayment penalties. This is nothing special. When you are looking for perks, then, just make sure they are really offering you something special.

Like with any other financial matter, there is a lot of misinformation that gets floated around about student loan consolidations. These little myths often keep people from consolidating when; in fact, it is the best thing for them. By taking a look at some of the more common of the myths, you will be able to understand what is true and what is not out there.

It is absolutely not true that you will lose your deferment eligibility if you consolidate your student loans. When you consolidate, you actually keep the core deferments which can be a big part of helping you pay back in a timely manner. Deferments can be made due to being in school, going to graduate school, economic hardship, and unemployment to name a few.

Consolidating your student loan is not like refinancing you house necessarily. Some people worry that if they consolidate they are starting over in payments and interest and will end up paying more in the long run. That is not true. For one, you can pay early with no penalty. Secondly, you will get a better rate and can pay all loans under that one rate. Consolidating, if anything, will shorten your loan term when it is all said and done.

As a final point, it is easy to think that consolidation is for those who do not know what they are doing with heir loans. It is unclear where this idea came from, but it is so common that many think it is fact and avoid consolidating. The truth is that consolidating your student loans, in almost every case, is a sound financial move. You will save money and shorten your loan time. It is that simple.

The process of getting your student loans consolidated is surprisingly easy. Once you have determined who you will use for your consolidation, the application is only about a page long. What is more exciting is that there are a few ways to fill out the applications. Take a look at the different options available to you so that you can decide what avenue works best for you.

One option is, of course, to do it in person. You can always go to the bank or financial institution that is consolidating your loan and take care of it there. Fill it out, sign it, and you will be done and on your way. The lending institution will review your application and contact you with their decision. What, though, if you do not live that close?

Surprisingly, you can fill out your application over the phone. It is not really that you fill it out over the phone, but by entering information you can go ahead and lock in rates for your consolidation. Once you have done that, you will likely be emailed or mailed the documents for you to finish filling out, sign, and send back in.

Thirdly, in this day and age it is not surprising that you can fill out your consolidation loan application over the internet. Many of the lenders have secure websites with the application there for you to fill out. Once you send it in, you get a hard copy and it is all taken care of in a matter of days.

Obviously, before you can consolidate, you need to find a lender with whom to arrange your consolidation. Luckily, there is a lot of competition out there which means two things. It means that the companies are easy to find and that they are all willing to compete for your business.

The first place to look is on your doorstep or in your mailbox. As you near the end of school or once you graduate, every lender around is going to send you a flyer, mailer, brochure, or catalog telling you about their consolidation packages. There is nothing wrong with looking through these freebie flyers. Often times you will be able to find a good package that way.

Another option, of course, is to talk with your school’s financial aid office. Someone there can certainly help you look for what you need. What is more, they will have had experience in the area so will know what to look for and what to avoid.

As a final point, you can look online. There will be many options available and it is easy to shop around that way. Be sure to contact places in person or over the phone, though, before filling out paper work. That way you can be sure that everything is on the up and up. It is a good way to avoid online scams and those seeking to just harvest your information and move on.

As you can see, there are many options for finding your student loan consolidation company. Just make sure you always shop around and ask questions. In the end, the best consolidation company is the one that gives you what you want.

No matter what you do with consolidation, it is possible that your student loan debt could end up being too much. With only ten years to pay them back, you could end up with a fairly high payment, especially if you go to graduate school or even add extra years to undergraduate work. High payments can really put a cramp in your financial situations. There is an answer, though. If you loans are just too much and the payments are unbearable, you can always extend them. You can take your loan and stretch it out to more years in many cases.

Though the standard is 10 years, your consolidation loan can, in most cases, be taken out much longer. You can stretch to 15, 20, or even 30 years. You will accumulate more interest that way, but with a lower payment each month, you will have more available capital with which to live your life. You will have to decide if you are willing to pay more in interest to make your finances more manageable.

Think of it like this. Would you rather own a house and a new car while paying a little more interest, or would you rather pay your loans off in 10 years, but spend those years in a small apartment with a bad car and no disposable income? Most would prefer the former over the latter. That is why there is no shame in extending your loan if that is what you have to do.