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.
What does it mean to consolidate a student loan? It means that you have arranged, with a financial institution, a different repayment schedule for your outstanding debt. Typically they will either buy your outstanding notes or arrange to make payment to the originator of the loan on your behalf. In turn, you pay them monthly. Debt consolidation results in a lower overall monthly payout by you, the borrower. However, the repayment schedule for the loan is often longer, meaning you will wind up paying more in interest over the life of the loan. Many people seek out debt consolidation loans because they cannot make their monthly payments and need to try to lower these. If you are in a situation like this, a student loan consolidation can be the answer to your problems.
Another thing to consider is that your credit rating has probably improved. It is not uncommon for new students to have low credit ratings as they have not had much opportunity to build up good credit. By the time you have graduated, often you have been able to build on your credit score. If your rating has improved, it is likely that you will be able to negotiate a better interest rate on a consolidated loan. Financial institutions will offer people with better credit ratings more favorable loans since they represent a much lower risk to the lender.
Most student loans offer graduating students a grace period, a few months of time between graduation and when repayment of the loan must commence. If you negotiate a consolidated loan during your grace period, bear in mind that the new lender will not honor that grace period. You will be required to begin repayments immediately. If you are not able to do so, hold off on consolidating your loans until the grace period is about to expire.
If you have decided that you want or need to consolidate your student loans for whatever reason, you need to carefully research the agencies you are considering. The financial aid office at your school may be able to provide you with some additional insight into the plans or lenders you are considering. You should also do an internet search on the companies you are considering. If there are problems, you will generally see them on the first few pages of search results. Your state attorney generals office and Better Business Bureau will also be able to provide information about consumer complaints against the lenders you are considering.
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.
Another thing to consider are the fees associated with consolidating your loan; interest rates and monthly payments are not the only expenses you will incur. In addition to any loan origination fees you should understand if there are any pre-payment penalties or other hidden fees. These can make your loan considerably more expensive over the long run.
A consolidated student loan may be the answer to your current financial dilemmas. It can be a good way to make your monthly payments manageable. Just make sure to do your research beforehand. Borrow from a reputable lender and make sure to understand the terms of your loan.
