Student loan consolidation is the process of combining multiple educational related loans into a single loan to decrease the monthly payment amount. With the interest rates in all student loan programs are now at record lows, students and graduates can save thousands of dollars in interest charges.
Student loan debt consolidation is the answer when you face something less enjoyable during the joy of college graduation — the repayment of student loans. Can you enjoy discussing potential careers and other promising life changes while you don’t know how to pay off your educational loans? Read on to learn whether you should consider a college loan consolidation.
Reasons to Consider Student Loan Consolidation
Student loan consolidation has a lot to offer. Some common reasons why consumers want to consider it as a debt relief option are money saving incentives, reduced monthly payments and fixed interest rates. Here are the benefits in details:
- Overall interest savings. If you have two or more of student loans, you may have owed amounts at different variable interest rates, and these rates can rise and fall yearly. Considering that the interest rates have nowhere else to go but up, if you consider a loan consolidation you can lock your interest at current loan rates and save some money over the long haul.
- Improved credit score. A loan consolidation not only save or reduce your long-term debt but it can also help change your credit score for the better over time. When you want a new car, apartment or other possessions an improved credit score is an important factor.
- Return to school is a possibility. If you left school for family, career or financial reasons a student consolidation loan can help you return to school. Once your loans are consolidated, you can keep your right for forbearance and for deferment. You can even take advantage of graduate repayment options that are not available while you’re on your multiple loans.
Is It Time to Consolidate Student Debt?
For the federal government consolidation loan program, there are actually no deadlines connected to it. You can apply for the student loan anytime during the grace period or even on the repayment period. But you should know that student loan consolidation usually take place during your grace period.
During your grace period the lower in-school interest rate will be applied to estimate the weighted average fixed rate to consolidate student loans. However, the higher in-repayment interest rate will be applied to estimate the weighted average fixed rate after your grace period has ended.
Interestingly, even when your student loans are already in repayment, you are still allowed to consolidate your student loans. Consolidating student loans at this time will benefit you because you have already fixed the interest rate on your government student loans while the rates are still low.
Student Debt Consolidation Loans for Debt Relief
Student consolidation loans can help student debtors in many ways. To really enjoy the benefits from the loan make sure you understand the trends of their interest rates. If the rates are so low now they won’t actually stay low without end because their only place to go is up.
So, if you are on your way out of college, consolidating your college loans is a good decision. As not all consolidation loans will be suitable for your needs, do compare a few through a comparison websites beforehand to get back the best option. Overall, student loan consolidation may not be the best option for you but it is definitely an option worth looking into.