There are a number of benefits that come with consolidating student loans but doing so is not a decision that should be taken lightly.
What are some of the benefits of consolidating student loans? Lower monthly payments are probably the biggest reasons people consider restructuring the way they pay off their college debt. This is great for those new graduates who have found themselves struggling to make their monthly payments since graduation.
Extending the amount of time you have to pay off their debt is another benefit of consolidating student loans for some. Doing that though will mean that a student ends up paying more in interest charges, which can add up to thousands of extra dollars in the long run.
Consolidating Student Loans – Can I Consolidate All My Loans Together?
Most students who have outstanding student loans have a combination of both federal and private loans that they have to pay back. Although consolidating them all together would be very convenient it is not possible, federal and private student loans cannot be consolidated into a single payment. Therefore if you do decide consolidating student loans is the right move for you you will end up making two different consolidation payments – one on your federal loans, one on your private loans.
Consolidating Student Loans – How to Get it Done
Once you have done a little research and decided that consolidating student loans is the right thing for you the process actually begins. Here is a very basic step by step guide to determine how to consolidate student loans the right way:
1. Make a list of all the student loan consolidation firms that interest you and contact each of them to obtain basic rate quotes and get a better understanding of how their particular process actually works. Be sure to ask as many questions as you need to to be clear about exactly what you are getting yourself into because once a student loan consolidation loan contract is signed there is no going back.
2. After making those calls and doing all the comparisons you will have to decide on the company with whom you wish to consolidate your loan with and then fill out a consolidation application with them. The company will then review and then process your application for consolidating your student loans. Usually your current credit rating will be taken into consideration during this process as well as your debt to income ratio. Therefore if you have poor credit you may be turned down or charged a higher rate of interest, just as you would with any other type of loan.
3. If you are approved (which can take as little as 48 hours or as long as several weeks) you will be provided with a student loan consolidation contract to sign. Read it carefully before you sign on that dotted line!
4. Once you have officially signed the contract agreeing to the consolidating student loans process the company you have chosen to work with with pay off your current student loan creditors. You will then begin making a single monthly payment to that loan company which will continue to be due until that happy day when you finally become student loan debt free!
