It is always best to be confident that you understand the full implications of any financial commitments you have. The student loans you build up in college need to be assessed before graduation so that the full picture of repayments and terms is clear. You should understand exactly how much each loan is about to cost you on both a monthly, annual and full term period. Combine the totals for each separate period, and a full picture of your future loan obligations will appear. It may well appear daunting and leave you wondering how you are going to keep track of it all.
Student loan consolidation deserves your utmost consideration, as it can reduce your overall debt. The primary purposes of consolidation are to streamline the payments into two monthly payments, reduce the interest payable, and to make any necessary adjustments to the length of the loans.
It is imperative that if you are considering student loan consolidation that you shop round for the best deals which will not add to your overall debt. Thus a primary point is to look for a no fee loan. There is no need to pay any fees if you look around carefully; all they do is increase your debt. Ensure that a loan gives you the opportunity to prepay without any penalties; you never know when a bonus or windfall can be applied against the principal.
Look carefully at length of repayment options: you want to be sure you can handle the payments without hardship or any possibility of default, but at the same time you shouldn’t consider the longest term in order to attain the lowest monthly payment. Your primary objective should always be to pay the loans off as quickly as is feasible, as the longer you hold them the more the total cost will be, due to the interest.
You cannot consolidate federal and private student loans into one package. Consolidating all federal loans together is a wise move and always check what is currently available through the FFEL as conditions can change. Federal student loans though, separately or consolidated, remain non dependant on credit checks and are guaranteed by the federal government, allowing for lower interest rates. Do not lose these benefits.
Private student loans need more researching to find the best rates, as they are generally subject to variable interest rates. They are also subject to credit checks, but can be consolidated any time after graduation. It is worth thinking of consolidating them once the first 36 payments have been met consecutively and you have your own good credit history, so the original co-signer may be released from the loan endorsement. Again ensure that pre payment at any time is allowable. Exercise diligence over the repayment term you take remembering always that the longer the overall term the more the total debt will cost.
Approach student loan debt consolidation armed with the knowledge to attain the best deal out there, and always shop around for the best deals. Spend the time on making a wise decision as it may be one you will have to live with for a long time. Never consolidate for the sake of it if the current loans do not need consolidating, but usually there are benefits to be gained. Any consolidation package that reduces your total student loan debt will most likely be a smart financial move to make.