Tips In Consolidating Student Loans

August 25, 2020

Unfortunately, not all students are financially well-off to pay for their college studies. Most of them often work part time just to be able to cover their daily expenses as well as school-related costs. Furthermore, most of them believe that once they graduate from college is that they can pay off all their student loans. But the fact of the matter is that finding a stable and decent job out there can be extremely difficult. Let alone, qualifying for one. This means that chances are, it will take a while before they can pay all their student loans.

Consolidating Student Loans

Another important matter that you need to remember is that you cannot consolidate private loans and federal student loans so that you can just make one payment instead. In addition to this, federal student loans as of July 2006 are converted from variable rates to fixed rates. This simply means that you can no longer take advantage of a low interest rate when you consolidate them. On the brighter side of things, there are steps you can follow to be able to consolidate student loans such as:

  • Not Extending the Term of the Loan: It may initially appear that you are paying a lower interest rate but then again, if you sum up the total amount that you will be paying for all those months and years, it will be greater than what you originally had.
  • Do Not Hesitate To Ask: Make sure that you ask for more information especially if something is not clear to you. Ask the consolidator if they charge originator fees and if they have pre-payment penalties. You should also not miss out asking the maximum interest rate and about the life of the loan.
  • Ask About Income-Based Repayment Plans: You should ask if you can opt to this option if you have a federal student loan. This is a good move especially if you will be settling for a low-income job for the time being.

As long as you are well-informed of your options and you are managing your finances responsibly, you will eventually pay off all those student loans.

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