Turning Many into One: Consolidate Your Student Loans
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Average 4-year college or university costs are up 6% over last year and the price of college education is increasing with every year. Nearly all college students borrow private money to finance their postsecondary education and many students have multiple loans by the time they graduate. Consolidate nonfederal student loans and make the entire repayment process easier by tying together all of these payments. Not willing or capable to consolidate nonfederal student loans by yourself?
Never fear, there are several national companies that specialize in exactly this type of financial service and will work with you to manage your debt obligations. As with all important financial transactions, however, it’s important to shops around for the best rate and terms. Loan consolidation is a one-time process; after you consolidate nonfederal student loans you won’t be able to do so again!
Once you’ve been approved by your lender, they will pay off all of your existing balances on other loans and they will set up a new payment plan which combines all your existing loans into a single lump sum. Please note – once you consolidate your loans, you’ll need to start repaying them immediately, so you may want to wait until the end of your graduation grace period before consolidating. Another benefit of a consolidated loan is the ability to lock in a single interest rate, rather than an adjustable rate that may increase suddenly a few years down the road. With any ‘locked’ rate, it’s a good idea to find the best rate you can to minimize your total payments. In addition, the terms of the loans will likely differ from the original student loans. For example, because you will be paying back a single larger sum (rather than several smaller amounts), the loan terms will likely be longer, which means more years in which you pay interest on the balance. In addition, you will be making a single larger payment than before (although it might be smaller than the total sum of the loans you were making payments on previously).
Be sure to weigh the pros and cons of student loan consolidation before making a large financial decision. This is a process that can make handling your debt easier and even less costly; however, if not handled carefully you may end up paying more interest over a longer period of time. Finding the right lender is a key element of managing the loan repayment process.
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