How Do I Keep Track of All These Student Loans?
With an average student loan debt of approximately $20,000 weighing on a students shoulders and savings at an all time low, college student borrowers often view their post graduate existence as a difficult one. At the critical juncture of a student loan repayment, financially drained graduates with tight incomes can feel the financial pinch as they juggle job hunting, business launching, home purchasing, and family building. A powerful debt management tool known as student loan debt consolidation is a viable option at any debtors’ disposal. Surprisingly, a recent survey found that 41% of college graduates had never heard of the federal student loan debt consolidation program, and that only 35% of those had taken advantage of this form of student loan refinance.
University graduates who have tapped into financial aid will gain much from a college loan debt consolidation, which combines existing student loans into a new single student loan. Student loan debt consolidation is easy, since:
1) There will be no credit checks or application fees involved, and
2) The applicant is not required to have collateral, be employed, or have a co-signer. The discussion below highlights the numerous benefits reaped by the average college student who chooses to consolidate a college student loan.
Borrowers will be aloud to select a manageable monthly amount that is tailored to their specific income needs. With the help of a student loan debt consolidation calculator, they can determine the number of years they would need to pay off the college student loan at that amount. An extended repayment period will enable them to reduce their monthly payments by as much as 60% in many cases. This will allow more disposable cash that can be put towards credit card bills, mortgage or rent payments, as well as auto, food and utility expenses.
Student loan debt consolidation will help to facilitate payments since borrowers will only have to issue one check to one lender, rather than to multiple lenders on different due dates.
By consolidating their college student loans, graduates will benefit from a great interest rate reduction.
For the majority of college student loans, the standard repayment term will be 10 years. Consolidation enables borrowers to extend the period up to as much as 30 years. By stretching out the repayment period, monthly payments are significantly dropped and become extremely easier, particularly for degreed individuals on entry level salaries.
Student loan debt consolidation can boost a student’s credit rating; this is because previous student loans have been paid off. When student loan debt consolidation takes place, the creditor will pay in full the student’s existing student loans and combines them into one new student loan. The student borrower no longer has numerous open student loans with a limited payment history. Previous student loans are listed as having been paid in full and this will give rise to an improved credit history and an overall enhancement of the student’s credit profile. With the improved credit score and history, graduates can now enter into future credit transactions with very little hassle.
Borrowers who consolidate there student loans can lock in a fixed rate of interest for the loan’s term. This is financially a good thing in that graduates are protected from any future increases in the interest rate.
Most lenders exempt borrowers who consolidate there student loans from pre-payment penalties for early or larger payments. Graduates are granted the privilege of deciding the period during which they will repay their debt in full.
Individuals who consolidate their college student loans can save time and money by opting for automatic withdrawal from their checking account. Usually this will allow their interest rate to be reduced by .25% when they authorize the automatic deduction of payments.
The interest that student loan debt consolidation will create is usually tax-deductible.
