School Loans Consolidation
Consolidating school or student loans is a process by which one can combine several loans into a single larger loan from one lender and in doing so significantly reduce the monthly payments and in some cases even the interest rate.
Say for example that your accumulated debt in school loans amounts to $40,000 and you are currently paying around $450 a month, consolidating those loans could potentially bring that amount down to $275 a month. This is not to say that this will be the case for every person, however, doesn't the possibility save $175 a month make it at least worth a try? Saving even half of that amount should make any young graduate freshly out of college and tossed into a tough job market happy enough.
There are even options available to consolidate most federal loans. These include options for FISL, Perkins, NSL, FFELP (Stafford, PLUS and SLS), HEAL, Guaranteed Student Loans, Health Professional Student Loans and Direct Loans.
Let's learn more about the federal school loans consolidation:
What do you need to know about interest rates? Find the average of the loans being consolidated to reach the interest rate on a conservation loan, round this number up to the nearest eighth of a percent or 8.25% maximum. Don't be fooled into thinking that this will alter the underlying cost of the loan, this the remains the same but the new structure may allow for a lower monthly payment.
What are the costs involved to consolidate? There might be a Sox slight increase in your interest rate, but the sites that there shouldn't be any costs involved. Take note that under no circumstances should you be required to pay an upfront fee to consolidate any federal education loans.
Which loans can be consolidated? You can consolidate any federal education. You can consolidate two previously consolidated loans, a new loan into a previously consolidate loan, but not a consolidate loan by itself. Also note that you can only consolidate a consolidation loan one time.
Can loans be consolidated with any lender? Graduates as well as parents can consolidate their loans with any lender; this can be done even to loans with a single vendor. Things to keep in mind when approaching a lender, however, include asking whether they require a minimum balance on the loans, cut-off lines are typically around $7,500, but may be as low as $5000.
Also good to know: Resist the temptation to extend the life of your loan, this will only increase the total interest paid over the lifetime of the loan. A good idea, seeing as you can change the repayment schedule of your loan once a year, is to start with a standard 10-year repayment plan and change that later on as circumstances change.