You may reduce your payment burden with student loans debt consolidation relief. Many recent graduates find themselves struggling to make student loan payments once they are out of school.
There are several reasons for this. For one, student loans usually only allow a six-month grace period for graduates to find a job before the repayment period begins. See also this Dave Ramsey video about negotiating down your student debt:
As many college grads already know, sometimes the job hunt takes a bit longer. Similarly, those graduates who are employed are often underemployed-working temporary or part-time jobs until something more permanent comes along.
Compound these employment woes with the tough adjustment between college life and the expenses of the real world, and it can be quite a strain to make multiple student loan payments each month. But student loans debt consolidation can help you reduce your payment burden to meet your budget.
Student loans debt consolidation works by bundling your existing student loans into one new consolidation loan, thereby reducing the number of monthly payments you make and also lowering the amount of your payment. In the case of federal student loans debt consolidation, you will also have the opportunity to lock in a low, fixed interest rate for the life of the loan. Here are some of the benefits of student loans debt consolidation:
- Reduce your monthly payment burden by 10%-60%
- Make one simple payment to one creditor each month
- The rate on federal student loans debt consolidation is fixed for life of a loan
- Extend your repayment term to up to 30 years
- No prepayment penalties
- Improve your credit score and debt-to-income ratio with consolidation
- Devote the money you save with consolidation to paying off high-interest debts
- Reduce your consolidation interest rates even further by taking advantage of our unique borrower benefits packages
You shouldn’t have to struggle each month because of burdensome student loan payments, so get payments that are right for your budget by applying for student loans debt consolidation. You are, in fact, the slave to the lender, so you better negotiate down your payment schedule!
Student loans debt consolidation involves paying off your existing student loans with a consolidation loan. Federal student loans debt consolidation is a free, government-sponsored program that is distributed through private lenders.
Federal student loans debt consolidation allows you to lock in a low, fixed interest rate for the life of the loan. Federal loan consolidation does not require a credit check, so virtually anyone with federal student loans who has not already consolidated can qualify. To determine your new interest rate when you consolidate, your lender will take a weighted average of the interest rates of your existing loans, and then round up to the nearest eighth of a percent.
If you have private student loans, you will apply for private student loans debt consolidation, which is much like any other loan you would receive from a private lender. These loans tend to have higher, variable interest rates and other fees associated with them, but they can still considerably reduce your payment burden.
If you are trying to decide if student loans debt consolidation is right for you, see if you fall into any of the following categories:
- You have at least $5,000 in student loans
- You have federal or private student loans (parents PLUS & grad PLUS loans also eligible)
- You are in a grace, repayment, forbearance, or deferment period
- You are no longer enrolled in school at least half-time (have graduated or dropped out)
- You have not consolidated your loans previously
- You are struggling to make your monthly payments
- You want the convenience of one payment instead of many
- Your student loans have high or variable interest rates you would like to reduce
- You would like to extend your repayment term
If you have private or alternative student loans, all of your loans should be eligible for private student loans debt consolidation, including private parent student loans. For federal loan holders, the following loans are eligible for student loans debt consolidation:
- Subsidized & unsubsidized Stafford loans
- Federal direct loans
- Supplemental Loans for Students (SLS)
- Federal Perkins Loans
- Parent Loans for Undergraduate Students (PLUS)
- Grad PLUS loans
- Federally Insured Student Loans (FISL)
- Health Professions Student Loans (HPSL)
- Health Education Assistance Loans (HEAL)
- Nursing Student Loans (NSL)
Student Loans Debt Consolidation Rates
With private student loans debt consolidation, your rates will be determined much like those of any other private loan. They will be based on market conditions, your creditworthiness, and the terms of your loan. For federal student loans debt consolidation, which will be so often needed after a study at one of America’s for-profit educational institutions, your rates will be based on a weighted average of the interest rates of the loans you’re consolidating before any lender discounts are applied. This weighted average will then be rounded up to the nearest eighth of a percent, with a federally-imposed maximum of 8.25%. You will enjoy this fixed rate for the life of your consolidation loan.
Student Loans Debt Consolidation Fees
Because federal student loans debt consolidation is a free, government-sponsored program, there is no cost associated with it. You can consolidate federal loans for free. With private student loans debt consolidation, on the other hand, you will likely have to pay application and origination fees, as you would with any other private loan.
Student Loans Debt Consolidation Terms
You can extend your repayment period to up to 30 years, depending on the balance of your existing student loans. Remember that extending your repayment period will increase your total interest cost because you are making smaller payments on the principal over an extended period of time. Make sure you look beyond the hottest jobs and find employment that’s really your cup of tea.
However, there are no prepayment penalties associated with student loans debt consolidation, so you can always choose to accelerate your payments.
When you take advantage of student loans debt consolidation, you might have questions about your repayment options. Check out our quick guide to make sure you know what options are available to you.
- Standard repayment. This is the usual repayment period on a federal student loan. For a fixed-rate federal loan in standard repayment, the monthly payment will remain constant for the life of the loan.
- Extended repayment. This is an option you can use when you take advantage of student loans debt consolidation or as part of your regular federal loan borrower benefits. This plan allows borrowers to extend their repayment period to up to 25 years in order to reduce monthly payments. Extended repayment is available for borrowers with over $30,000 in federal student loans that were received on or after October 7, 1998.
- Income-sensitive repayment. This plan bases your monthly payment on your monthly income. The monthly payment must at least be enough to cover the monthly interest. Borrowers must submit income documentation in order to qualify, and you must re-qualify every year.
- Graduated repayment. Most federal loans and some Student Loans Debt Consolidation programs offer graduated repayment. With this plan, you start with a lower monthly payment, which gradually increases over the repayment term. Usually, the repayment amount increases every two years and must be at least enough to cover interest expenses.