Student Loan Consolidations
You're off to college, you've won scholarships and grants, but it's still not enough to cover your education costs. Below we'll tell you even more ways to make a college degree a reality! Then we'll show you why consolidating those loans is beneficial.
Types of Loans
There are three main sources of student loans:
Federal Student Loan
Subsidized Stafford loans do not charge or accumulate interest until after you have begun repaying the loan. These loans are generally given on a financial need basis.
Unsubsidized Stafford loans begin accumulating interest as soon as the loan is made. You will be charged interest from the time the loan is spent until you have repaid the loan fully.
Private Student Loans
You re all done with school! Time to pay off those loans. Here are reasons why you should consider consolidating.
1. Interest rates are at their lowest point in the program s history and when you consolidate, you can lock-in these low rates. In other words, if you consolidate now, you won t be subject to rate increases if they happen.
2. Consolidating student loans can lower your monthly payment because the term of your loan is extended. This leaves room for you to pay off larger debts or whatever else you want to put your money towards. Keep in mind, though, that the reason your monthly payment decreases is because you are paying your loan over a longer period of time.
3. Consolidating loans also allows for the convenience of paying all your federal loans with one payment.
Are There Risks/Drawbacks I Should Be Aware Of When I Consolidate?
A great benefit to consider about student loan consolidation is that there are no fees or prepayment penalties. If, for example, you did not really need the lower monthly payment afforded by consolidation and could have paid the higher amount, you can continue making the same monthly payment before the consolidation and payoff your loans over the same period.