Debt from student loans can be crushing to recent college graduates and get in the way of achieving other life goals. Fortunately, there is a way to reduce the strain on your finances and even improve your credit score. Many graduates are turning to loan consolidating to help manage their loan repayments. The procedure and requirements differ from federal and private loans.

Consolidating Federal Loans

Stafford loans and Federal Perkins loans are examples of federal loans. These loans are given to you by the government and may or may have accrued interest while you were attending school. Consolidating your federal student loans provides a fixed-rate refinancing program that takes all of your existing federal loans and combines them into one new loan. Your monthly student loan repayment could be cut by as much as 50% as well as reduce your interest rate by .6% if you consolidate during your grace period. One monthly payment will help you simplify your finances.

Payment relief

By creating one consolidated loan you can receive payment relief, a lengthening of your repayment term from the standard 10 years to up to 30 years. This frees up your disposable income to spend on other expenses like car payments, housing, and work-related necessities. There are no penalties for overpayment, so when the funds become available you can make larger payments and minimize your repayment term.

Consolidating Private loans

Like federal loans, consolidating private loans means lumping everything into one new loan. To consolidate your private loans from undergraduate school you will have to apply with a qualified co-signer in order to be approved. If you have a graduate degree you do not have to apply with a co-signer.

Some of the benefits include reduced interest rates, rate reductions, deferment, and no prepayment penalties. Loan holders may lower your interest rates if your credit has improved. Applying with a co-signer who has good credit could help you get a lower APR loan. There is a grace period for medical/dental residents as well as military personnel if their private student loans are consolidated. As with federal student loan consolidation, you can also have your repayment period extended allowing you to pay the lowest monthly payment possible.

By: Joseph Devine

It’s time to consolidate your student loans and you want to know exactly what to expect. You can always contact a lender by phone to discuss terms and have them try to sell you on consolidating with their programs. You can visit your local banks and financial institutions to see what deals they offer. The easiest way to get payment information on your potential consolidation loans is by going online to find a loan calculator. There are a number of websites that have this feature and it is easy to use.

Knowing the Difference

When you are looking at consolidation you will find that lenders offer a variety of similar interest rates to attract borrowers. Small differences in percentages can make a big difference in payment so you need to know how much those little points will cost you. The student loan consolidation calculator takes into account your loan amount, percentage for interest and term for repayment.

Using the Calculator

You will need to enter the loan amounts and interest rates for your outstanding loans. Sometimes you will be able to enter the total amount of your loans combined to do this step. You need to make sure you enter your base interest rate for the consolidation loan. There is usually a section where you enter the duration for repayment so you can get a better idea of how much each installment will be. Finally, you click the ‘calculate’ button and get all the information you need.

You should be aware that the information from online student loan consolidation calculator. It is considered as estimates of the actual amount. There may be fees, charges or a change in rate that will affect your particular repayment. Your credit will also affect the consolidation loan you get if you are consolidating private loans.

By: Sara Sentor