How School Loan Consolidation Can Save You Money

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For students about to graduate from college, graduate school, or a finishing school, leaning towards school loan consolidation may save you a few extra dollars. Facing hefty student loan payments can put a damper on any graduation ceremony, especially for those students still looking for jobs. However, paying off a college student loan is not an impossible feat, and looking into school loan consolidation can be a lifesaver for many individuals.

What is Consolidation?

Consolidating a federal loan is taking all of the student loan payments you owe and combining them into one lump sum. This allows students to have just one monthly payment to one lender instead of several payments scattered all over the place. What is also beneficial about a school loan consolidation plan is that a student can usually get a little lower interest rate by choosing to combine all their loans together. Although the lower percentage may not be an extravagant amount, it can still make a difference when you are living paycheck to paycheck right out of college.

Federal loans are also nice to consolidate when you do have problems with an incoming salary because there are several options available to students who need to defer payments. Federal loans, even consolidated loans, allow a grace period of several months after graduation before a student must start making payments.

There are also low-income allowances when a student needs to defer payments for a period until they have money coming in the bank. The nice thing about federal loans is that federal laws regulate interest rates, not by the lender, so they will be a little lower than a private loan.

Applying and Consolidating

When it comes time to apply for a college student loan, you will have several options available. If you choose to go the private route, then your loan and payments will vary based on your credit history, as well as how high the interest rate is for your lender. You will also lose the opportunity to consolidate your loan, since only federal loans are consolidated. If you go the federal loan route, then you can look into Stafford loans, Perkins loans, or other federal consolidation programs offered by some of the larger national lenders.

You should always shop around before making a final decision on a lender so you will be sure to get the best possible loan at the lowest rate. If you choose the federal loan route, then you will be able to consolidate as much as you need because there is no set limit on loan consolidation for student loan payments. You won't have fees for applying for a federal loan consolidation, and very few penalties exist for these types of loans.

It takes approximately 45 days for you to begin making payments on your school loans. The amount that you borrowed and the interest rate of your loan will determine how much time you have to pay it back. A school loan consolidation might be an option for you later on.

Finding a student loan is a very personal decision because no one is going to be in the same boat. Everyone will have different needs and situations factored into applying for a school loan consolidation. The best thing to do is talk with your college's financial aid advisor and let them help you find a lender and a loan that will work for your individual circumstances.

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