Student loans differ from other types of loans in that they usually offer a greater amount of leeway in the amount of time you are allowed to repay the loan, as well as your consolidation options. Here's how to make the most of the options available to you.
1. Prioritize your student loan debt
Take a long, hard look at all of your student loan debt and prioritize the loans that should be paid off first. This usually means the loans that are costing you the most amount of money, or have the highest interest rates.
Be aware there are two types of student loans - federal loans, which are funded by the government and usually carry a very low rate of interest; and private loans, which normally require an above-average credit score or a co-signer. Private loans usually carry higher interest rates.
When you start considering private consolidation, you will want to focus on your privately funded loans, and not combine them with your federal loans as it is unlikely that you will obtain a better interest rate on those than you receive from the government.
Also, if you are looking into consolidation and you have debt with a very high interest rate, such as credit card debt, you may wish to concentrate on consolidating those debts first, as they are probably costing you more than your educational debt.
2. Compare the interest rates of various private student consolidation loans
The interest rate for your private student consolidation loan will be determined by a number of factors. If you have improved your credit score since you first acquired the loan, you may be able to secure a more favorable fixed interest rate than you were originally offered.
Shop around for a consolidation loan and talk to different lenders about your options. Often banks will offer a lower fixed interest rate if you set up an automatic draft to make your monthly payments from your bank account. Others offer a short deferment after the loan is approved before requiring repayment to begin.
Try to obtain a loan that carries no penalty for repaying it early. You can save on the interest rate by sending extra payments towards the loan's principal throughout the year. This is also a helpful tip for repaying your educational debt sooner.
3. Put forth every effort to repay your student loan debt
Never underestimate the importance of repaying your educational loans, regardless of how long it may take you. Failure to meet this obligation can cause many problems for you in the future, starting with requests for immediate repayment of the loan in full and moves toward wage garnishment, as well as severely damaging your credit score.
Your student loans are often the first foray into the financial world, and are very important for this reason alone. Making it a habit from the very beginning to repay your debts, starting with your educational debts, can shape the correct attitude in your life towards debt and lay the framework for a successful financial future.
Your credit is only as good as the trust lenders have in you. Private student loan consolidation can help you maintain that trust by fulfilling your obligations. You may have difficulty qualifying for automobile loans, home loans or other types of credit in the future if you do not attempt to repay your student loans. Also, while student loans do have more flexibility than other kinds of debt, there is one way that they are the worst kind of debt: They never go away. Not even filing bankruptcy will clear your student loan obligations.
Pamella Neely eats well and cooks a lot of different things out of what she finds in her compact refrigerator freezer. It takes discipline to keep a compact refrigerator from overflowing when you live in one of the world's greatest eating capitals.
Article Source: http://EzineArticles.com/?expert=Pamella_Neely
Saturday, May 22, 2010
Wednesday, March 24, 2010
Student Loan Consolidation - Save Time & Money
Is Student Loan Consolidation a Good Idea?
Consolidating your student loans can be a tricky process. What goes into it? Is it a better deal than what I am paying now? Can I consolidate quickly? Here's the scoop.
Consolidation Loans combine two or more student or parent education loans into one bigger one from a single lender, which is then used to pay off the balances on the others. Doing this allows you to pay one lender for all your borrowed money, simplifying your bill paying procedures each month. It is very similar to refinancing a mortgage. Consolidation is available for most federal loans, including FFELP (Stafford, PLUS and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, as long as many other types. Some lenders offer private consolidation for private education money you might have borrowed from someone other than the Federal Government as well.
Is this a good idea though? Other than making all your payments to one place what are the benefits? Generally, you aren't going to pay any more or any less in interest by consolidating, as the new loan takes a weighted average of your previous commitments to determine your new interest rate on your education consolidation rate. According to FinAid.org: "The interest rate on a consolidation loan is the weighted average of the interest rates on the ones being consolidated, rounded up to the nearest 1/8 of a percent and capped at 8.25%."
If you don't save on the interest than, what's the point? The benefit, in addition to consolidating with one lender is that you can consolidate borrowed money with any lender, there is no cost to consolidate and you get access to better repayment plans than the standard education loans give.
For example, you can easily lower your monthly payments by consolidating educational debt by extending the repayment period a number of years, often making it an affordable monthly expense instead of a burden. Consolidation provide access to several alternate repayment plans besides standard ten-year repayment, as mentioned. These include extended repayment, graduated repayment, income contingent repayment and income sensitive repayment. If you do not specify the repayment terms, you will receive standard ten-year repayment.
Those last two options are of particular interest for low income students with loans, single mothers (or fathers) with education loans and anyone who may be unemployed at the moment or working only part-time. Those payment plans will be more sensitive to your economic circumstances than the regular repayment plans.
In the end, education consolidation is often a quick and easy solution to lowering your monthly loan payments, reducing your debt and keeping your education expenses manageable.
For more information about education expenses, other cost saving tips and resources for college students check out http://www.scholarshipsformommies.com.
Consolidating your student loans can be a tricky process. What goes into it? Is it a better deal than what I am paying now? Can I consolidate quickly? Here's the scoop.
Consolidation Loans combine two or more student or parent education loans into one bigger one from a single lender, which is then used to pay off the balances on the others. Doing this allows you to pay one lender for all your borrowed money, simplifying your bill paying procedures each month. It is very similar to refinancing a mortgage. Consolidation is available for most federal loans, including FFELP (Stafford, PLUS and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, as long as many other types. Some lenders offer private consolidation for private education money you might have borrowed from someone other than the Federal Government as well.
Is this a good idea though? Other than making all your payments to one place what are the benefits? Generally, you aren't going to pay any more or any less in interest by consolidating, as the new loan takes a weighted average of your previous commitments to determine your new interest rate on your education consolidation rate. According to FinAid.org: "The interest rate on a consolidation loan is the weighted average of the interest rates on the ones being consolidated, rounded up to the nearest 1/8 of a percent and capped at 8.25%."
If you don't save on the interest than, what's the point? The benefit, in addition to consolidating with one lender is that you can consolidate borrowed money with any lender, there is no cost to consolidate and you get access to better repayment plans than the standard education loans give.
For example, you can easily lower your monthly payments by consolidating educational debt by extending the repayment period a number of years, often making it an affordable monthly expense instead of a burden. Consolidation provide access to several alternate repayment plans besides standard ten-year repayment, as mentioned. These include extended repayment, graduated repayment, income contingent repayment and income sensitive repayment. If you do not specify the repayment terms, you will receive standard ten-year repayment.
Those last two options are of particular interest for low income students with loans, single mothers (or fathers) with education loans and anyone who may be unemployed at the moment or working only part-time. Those payment plans will be more sensitive to your economic circumstances than the regular repayment plans.
In the end, education consolidation is often a quick and easy solution to lowering your monthly loan payments, reducing your debt and keeping your education expenses manageable.
For more information about education expenses, other cost saving tips and resources for college students check out http://www.scholarshipsformommies.com.
Student Loan Consolidation
Consolidate your student loans now! With this bad economy it is never too early to start saving money by refinancing student loans. Paying hundreds a month just shouldn't have to happen. student loan consolidation is the answer!
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