Consolidating Your Student Loans

Getting through school is a worthwhile accomplishment. You start a new life, hopefully launch into a new career, and have to start paying those college bills. By consolidating your student loans into a single payment, you can take advantage of lower monthly payments and possibly receive a longer repayment term. Here are some tips on how to consolidate your college loans to enable you to manage your debts better and enjoy life more while you are doing so.


When you ready to consider a consolidation of your student loans, it will be necessary to keep all private loans separate from your federal education loans. They cannot be consolidated together.

The best time to consolidate your college loans is during the 6-month grace period that you get right after you graduate. When you consolidate during that time, you can receive a .6% greater discount in interest than if you wait until the grace period is over. The basic interest rate on consolidation loans for your federal college loans will be the same wherever you go.


Be sure to talk to your potential lender about what options you have in the way of payments before you sign a loan agreement. There are four main options available to give you the most comfortable repayment deal possible. Here are the various options you have:

• Standard Repayment - equal payments over an extended period, but short enough to reduce interest.

• Graduated Repayment Plan - This plan allows you to start with small payments that increase as your salary increases (for Federal loans only).

• Income-Sensitive Payment Plan - put a stated percentage of your paycheck toward paying off your college loan (for Federal loans only).

• Extended Payment Plan - This plan gives you the most time to pay back your education loan, but you also will pay the most interest.


If you are thinking about going for a graduate degree, now is the time to make that decision - before you consolidate. Remember that your college loan payments are not due as long as you are going to school half time or more. After you consolidate, however, monthly payments for private college loans are due each month – and they cannot be reversed.


The benefits that you receive from the new lender may be different than the benefits you have now. Be sure to understand what privileges and requirements will apply to your new loan once you consolidate. After you sign - you are stuck with whatever you got, and a new consolidation is not possible.

Be careful to consider all of the costs to you that may apply. Anytime that you extend the length of the payments you are also increasing the amount of the interest that you will pay. While you do want the time period of repayment to be long enough to be comfortable, it is not a good idea to take as long as possible – unless it is absolutely necessary. When you consolidate private college loans, make sure that you can pay off the loan early without any penalty fees applying.

Before you apply for a college loan consolidation, you will want to calculate your budget to make sure that you leave enough money each month for you to be able to enjoy some things and possibly even move forward in your career and life. Also, do not forget that your interest rates become locked once you consolidate. This means you will need to leave some extra money for annual cost of living increases.


When you need to consider consolidating your college loans, you do not want to wait very long. Besides enabling you to take advantage of the lower interest rate for federal loans, you can also keep your credit intact. If you wait longer than the grace period and cannot make the payments, you could badly damage your credit and cannot consolidate afterward.

When you default on loan payments, it will be necessary to get caught up before you are allowed to consolidate your debt. This makes it even harder to repair a problem credit rating. Consolidate your college loans early and save yourself the headache later on.

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