If you are paying on multiple student loans each month, you may want to consolidate them. When you consolidate your loans, your balance on your current loans is paid off and you will only have one monthly bill for your student loans.
Not all student loans can be consolidated. If you financed your education with Perkins, Stafford, or PLUS loans, consolidation will not be a problem. These loans are federally guaranteed. Private loans that were not federally guaranteed, however, can not be consolidated. Also, most lenders will only consolidate your loans if you owe over $ 7,000. You will only be able to consolidate once, unless you take out additional loans, so make sure that you are happy with the terms and read all the fine print before signing a loan consolidation contract.
There are different benefits to consolidating your loans. In addition to less loans to keep track of, you can often enjoy a lower interest rate if you consolidate your loans. Your total monthly payment will usually be lowered. Your monthly payments will of course depend on your total loan amount, your loan term, and your interest rates, however, you can expect to save up to 50% a month if you consolidate with the Federal Loan Consolidation Program.
The student loan repayment period is typically ten years, but if you have trouble paying the minimum each month you may be able to extend it with consolidation for up to thirty years. This will lower your monthly payment and you will no longer have to worry about late fees and penalties. Before you do this, of course, remember that this will increase the amount of money you owe as interest will be accumulating for a longer period of time.
If you have borrowed your loans from multiple lenders, you have several different options available to you when you consolidate your loans. Any bank or credit union that participates in the Federal Family Education Loan Program can help you consolidate your loans. When contacting different lenders, you might notice that the interest rate will not vary greatly from place to place. Instead, look at any fees or penalties the bank may charge to find the best deal for you.
If you have borrowed all your loans with the same lender, you must agree with that lender. Although you will not be able to shop around for the best terms, a loan consolidation may still offer you better interest. Additionally, you can benefit from a simplified process if all of your loans are in one place. So whether you have twenty loans or three, you should investigate your loan consolidation options to see if you can save money on your student loans.