Why should you consolidate student loans? The answer is simple – you lower your monthly payments to fit your budget, make repayment much easier and save money on lower interest rates.
Whether you have federal, private, graduate student loans or parent PLUS loans, you should consolidate those loans so you can manage your monthly finances.
As you start your new life and new career, you need your money for rent, new furniture and maybe a new car. You could be considering buying a home, getting married or starting a family. Whatever the case may be, this is the time when you need your money the most.
With the average post-secondary student graduating with over $20,000 in loans (Stafford and Perkins loans), you can see why it’s important to consolidate student loans and make them financially manageable.
When you consolidate debt, you lump your existing student loans into one large loan. By doing this, your monthly payment on the consolidation loan is much less than the total monthly payments of all your existing loans. And that provides you with the much needed money to get your life started the way you want.
I think you’ll agree that it’s much easier dealing with one lender and one due date instead of multiple lenders with multiple due dates. By consolidating your student loans into one, you get to manage one loan with one lender so you don’t have to juggle due dates and payments. The risk is missing or forgetting a payment is greatly reduced.
Student loan consolidation gives you the opportunity to get a lower interest rate. Many lenders are interested in your business and the interest rates you receive can be very competitive.
Federal student loans need to be consolidated on their own, separate from private student loans. They receive beneficial conditions and rates already, which can be lost if they are lumped with private student loans.
When you consolidate student loans, the consolidation loan pays off the existing student loans. By doing this, you essentially have paid off several loans at one time. This gets recorded on your credit report as successfully paying off loans. And that improves your credit score.
How does that affect you? If you’re looking to buy a car or get a mortgage, a better credit score means lower interest rates for you. That can save you thousands of dollars over the life of a loan or mortgage.
When you consolidate student loans, you can lower your monthly payments and get a lower interest rate. Dealing with one lender saves you from juggling multiple loans with multiple due dates. You also get the added bonus of improving your credit score. All of this adds up to saving you money and making your student loan more manageable.
Thomas Erikson is co-founder of http://www.your-debt-consolidation-loan.com which provides student loan consolidation information and solutions.