| Consolidating Student Loans - Know The Facts Before You Sign |
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| Written by Michael Perry |
| Friday, 21 August 2009 09:19 |
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The state of the economy is in bad shape and more and more college graduates are unable to repay their private or federal student loans. Consolidating student loans might be their answer.
The state of the economy is in bad shape and more and more college graduates are unable to repay their private or federal student loans. Consolidating student loans might be their answer. Think carefully about your dilemma and make sure you have researched all available options to you before making a decision. This type of loan consolidates all your student loans into 1 payment. You will only be required to make 1 payment to 1 lender and not several as you did before. This is good for you because you don't have to stress over making multiple loans. The only loan you will be responsible for is the one monthly payment that you must pay on time. If you're having a difficult time paying all your loans now then this might be ideal for you. This sort of loan comes with a fixed interest rate and this should be considered. You should however avoid getting this kind of loan if you are near finishing paying off your student loans. They could either be having a hard time paying multiple lenders or it could be that all the loans are too much for them to pay monthly. A point to note is that consolidating federal student loans all have interest rates that are fixed. This policy went into effect in 2006 when the federal government mandated that federal loans all have fixed interest. This might actually be good for you if you know what you're doing. You can save a lot of money if you take out a loan with a low interest rate. A high interest rate on the other hand should make you wait until a more favorable interest rate is available. Such loans are almost always paid back in many installments. Lenders prefer it that way. This will give you a low monthly payment but because you are paying many payments it also means you're paying more interest. You should also be careful whenever attempting to consolidate federal student loans. Doing so might stripe you of your rights that come with federal loans. If however you have no other options then try to work with one of your current lenders who might offer consolidation loans. It would make things much easier for you because the lenders have already worked with you. There are other lenders of course and when looking for loans keep in mind that the interest rate is the most important aspect. Using a co-signer who has excellent credit ratings could also prove to be a good idea. A person with good credit is likely to secure a loan at lower interest. Whatever you decide carefully think and re-think your decision. A consolidated student loan might be something that you regret if you are not careful. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Michael Perry answers questions such as how to consolidate my student loans. He also blogs about how to consolidate federal student loan |