Have you thought the benefits of the student loans consolidation, if you have just graduated from the college? Have you ever gone through, what consolidating student loans honestly mean? I mean the facts, not the many rumours!
The student loans consolidation means simply, that one new loan will be taken with which all the different student loans will be paid away. However, a grad cannot consolidate the federal and private loans nor the loans of the spouse.
1. The Impact On The Credit Score.
Lets assume, that a grad has both the federal and private loans. He can consolidate them into two loans instead of five, for example. Now the stats show, that he or she has succesfully paid away the old loans, which means that he is a good borrower, and taken two new ones. The end result is that the credit rating will improve, which means lower interest rates and better chances to get the loan in the future.
2. The Lower Monthly Payments.
The interest rates of the federal loans are fixed, so a grad can ask, is there anything to win. The private loans with variable rates can bring substantial savings. There are usually two reasons. If a grad has got a job, he has better positions to negotiate, which means lower interest rate. If he at the same time will lengthen the running time, it will reduce the monthly payments effectively.
3. The Grace Period Is Important.
The term Grace Period means, that the repayments of the student loans will start 6 months after the graduation. The end part of the Grace Period is important thinking about the consolidation. When a grad will do the student loans consolidation during the Grace Period, he or she will get 0,6 % reduction in the interest rates for the whole running time. You can calculate, what this means for 30 years!
4. Take Care Not To Lose The Many Benefits.
In theory it is possible to consolidate the private and federal loans. However, the federal loans have better terms, like lower interest rates and the forgiveness options. It is not wise to lose these. That is the reason, why a grad should always consolidate private and federal loans separately.
If you have only one year, when you will do the payments, there is no reason for the consolidation. If the lender wil ask the in fron fee, you better to calculate, if it is wise to consolidate. There are only two lenders, Chase and Wells Fargo, who do the private loans consolidations. Note, that one out of five borrowers will be accepted. Most lenders use a minimum loan amount for the consolidation.
5. The Interest Rates Of The Longer Loan Are Bigger.
This is natural. Even if a grad saves in the monthly payments by lengthening the running time, it means more paid interests. The ideal situation, if possible, is that a grad wil start to pay away the private student loans immediately after the Grace Period.
