You might have heard of student loan consolidation already and have wondered what it is actually about. There may still be a lot of questions in your head but as you read on, hopefully, you will grasp the basic information about student loan as commonly asked questions are being provided with answers.

Question 1. What is student loan consolidation?

Student loan consolidation, also known as private student loan, is the primarily merging of all your outstanding loans into one single loan. This has a fixed interest rate, usually much cheaper that the overall interest that you are paying, and is handled by a single lender.

Question 2. What makes student loan consolidation different?

Student loan consolidation is unique in the sense that it has certain benefits that only comes with student loans. For instance, the interest rate for consolidating your loan might be tax deductible. There is no greatest possible amount available, and you have a repayment term you can potentially defer or postpone temporarily. And if ever a borrower dies, debt is fully discharged.

Question 3. Why might I consolidate?

The main reason to consider consolidating are the following:

• rolls all your student loans payments into one monthly bill

• locks in on a fixed, usually lower, interest rate for the term of your loan, potentially saving you thousands of dollars (depending on the original, overall interest rates of your previous loans)

• potentially flexible repayment options during hard times with no fees, charges or prepayment penalties

You should consider consolidating your loans if it has a lower interest rate, without a question, compared to the ones you are currently paying, most especially if you are having a hard time coping up with your monthly payments. On the other hand, if you are close enough to paying off your existing loans, then consolidation is not worth it.

Question 4. What are some pitfalls for consolidating your student loan?

Because you can actually extend your repayment term, you can make smaller payments in each month. but keep in mind that with each passing months, the interest rates are also building up. It might seem that you save each month by paying less, but you still lose a lot of money to the interest. On the other hand, since student loan consolidation has no penalties for paying off your debts early, then you can make larger than required payments once your income increases.

Question 5. Should I consolidate if all my loans are in one location?

You don’t have to but if you want to, you can. The lender will simply repackage your loans so that they will have the above mentioned characteristics. If you only have one lending company, this may limit your options on who to consolidate with. If you are still a student and you need to have another loan, try getting loans from other lenders so you will have more choice when you graduate.

Question 6. How do I know my interest rate?

Some statements will show you the rate of the loan so try checking on them. If it’s not there, you can always call your lender and ask. Be sure to have all the rates if you still have multiple loans. The interest rate for a consolidated loan is based on the overall interest rate of your existing loans.

Question 7. Can my spouse and I consolidate our loans together?

Yes you can, but it might be a bad idea. For one, if you want a deferment, both of you should meet the criteria. If one of you dies earlier, then the other is obliged to pay off the deceased’s debts. If later on you separate or divorce, you will still have to pay the loans off together.

Question 8. When should I consolidate my loans?

It is best to consolidate your loans during the sixth-month grace period. By then you will get a lower interest rate. However, it is wise to consolidate your loan on the fifth month of your grace period so you will not lose the rest of the grace period.

Question 9. Where can I get a consolidation loan?

If you are satisfied with your current lender, then you can consolidate with them. If it’s a bank, call them up and ask what they can do for you.

By: Elanora T. Kelly

Before getting a student loan, it is important to understand that you should only borrow for the cost of attendance including your tuition, lab fees, books, and any living expenses you will have throughout the year. Of course this amount should be lowered by any other financial assistance you will receive. If you have been awarded a grant or scholarship, you should be able to lower your loan amount by the amount that has been awarded to you.

Often, the school you want to attend figures the cost of attendance for a wide range of students and they don’t take into consideration any grants or scholarships when publishing this dollar amount. You may not need to borrow as much as the school says you will due to your circumstances. Borrowing less money now lowers your financial obligations in the future when it’s time to start paying back the loan.

If you find you need more money than your school allows to cover the cost of attendance, you can make an appeal to have it re-evaluated. However, the amount you are asking for cannot go over the amount that federal regulations has established as a maximum amount to be borrowed.

If you are completely financing your education with student loans, be sure to check into how much the borrowing restrictions are for your lender. The federal government places restrictions on borrowing amounts yearly and for the total amount you can borrow during your education. Make sure you evaluate the terms for each loan you will take on for the yearly and total restrictions.

Take a close look at the financial commitments you currently have and honestly assess your current financial status. Doing this before you enter school can let you have a better understanding of where you are at in your current finances. After school, you will be responsible for any of the student loans you have taken and any prior debt that you had as well.

Now take a moment to consider what your realistic future income will be. Do some job market research online for the areas you plan on living after you attain your degree. Your future income pays a big part in how much student loan debt you will be able to pay back after you leave school. Taking this into consideration before getting a student loan will help you to determine alternative payment plans to assist you with making your payments early in your career.

By: Ian Wilkie

Student loans can be a long-term burden that can hang over your entire young adult life. Many students wonder about how they can pay back their student loans. If you have more than one student loan or are interested in loan consolidation, the following information may benefit you.

A consolidated student loan follows pretty much the same guidelines as a regular student loan. Your guidelines and payment schedule are provided by the lending institution. Your first payment is usually due 30 to 60 days after you’re approved for consolidation of your student loans. You should continue to make your payments on your individual student loans until you receive acceptance or approval of your consolidation application.

Most institutions will provide you with a choice about how you want to pay back the consolidated student loan: standard payment plan, graduated payment plan, variable payment plan or extended payment plan. A standard payment plan involves a set monthly payment that does not change over the life of the loan. A graduated payment plan involves starting with low monthly payments and gradually increasing the payments until the loan is paid off. A variable payment plan will allow you to adjust the amount of your payments based on changes in your incomes and expenses. And finally, an extended payment plan gives you a longer period of time to pay off your loan, thus reducing the monthly payment.

Beware of consolidation lenders who charge a fee to consolidate your student loans and lenders who charge a fee for early repayment of the loan. There are plenty of lenders out there who are willing to consolidate your student loans without charging any fees. Don’t sign any paperwork until you’ve verified that the lender has none of these fees hidden in the paperwork.

Finally, be aware that some lenders require a credit check before approving your consolidation application. This is standard procedure and nothing to worry about if you have a slightly below average or better credit rating. If your credit rating is on the low side, you should know that consolidating your student loan may improve your credit rating.

By: Tim Gorman