One of the options that students want to consider once they start having to pay their student loans back is whether they should consolidate their student loans. Consolidation is the process of bringing all of your debt together into one convenient monthly payment.
Many companies participate in consolidation loans, including companies such as College Avenue student loans, Earnest.com, and others.
You can look at the interest rates of consolidation or refinancing loans to find out more about where they’re currently at. Learn more about the benefits of student loan consolidation here.
Federal Student Loan Consolidation
It is important to note that only federal loans will qualify for some types of consolidation programs. For example, the Federal Department of Education allows you to take all of your federal loans and put them into one lump sum payment per month. This usually makes it more convenient to make your payment each month and to make changes or update your account.
Do your due diligence regarding what the policies of these companies are, and make sure you know what you’re getting into before you sign.
Private Student Loan Consolidation
If you have a private student loan, it’s not quite a simple as consolidating federal student loans. Many private lenders offer refinancing loans, but interest rates and terms will vary.
To find out more about whether your private student loan is able to be consolidated or at least put into one payment, you will need to go to your lender’s website and find out what your refinancing options are.
If consolidation is not offered, you may be offered another way to lower your payments, the interest rate, or both. The goal is to create a payment structure that you can comfortably pay.
This may offer some relief for new graduates who are struggling to repay their loans. However, you should think through consolidating carefully. Only use it as an option if you can’t afford to repay your loan on your existing term.
The best way to solve problems is at the beginning, rather than the end. Look into your loan options at the beginning of your college career and determine if you’ll be able to pay it back in a reasonable time.
Whatever you decide, remember some decisions you can’t take back. Just do the best you can to get the best deal on any type of loan you take out. Even better – make sure you’re in a field that will pay well enough to justify borrowing the money in the first place.