3 Things Every Student Should Know About Student Loan Consolidation

Student loans differ from other types of loans in that they usually offer a greater amount of leeway in the amount of time you are allowed to repay the loan, as well as your consolidation options. Here’s how to make the most of the options available to you.

1. Prioritize your student loan debt: Take a long, hard look at all of your student loan debt and prioritize the loans that should be paid off first. This usually means the loans that are costing you the most amount of money, or have the highest interest rates. Be aware there are two types of student loans – federal loans, which are funded by the government and usually carry a very low rate of interest; and private loans, which normally require an above-average credit score or a co-signer. Private loans usually carry higher interest rates.When you start considering private consolidation, you will want to focus on your privately funded loans, and not combine them with your federal loans as it is unlikely that you will obtain a better interest rate on those than you receive from the government. Also, if you are looking into consolidation and you have debt with a very high interest rate, such as credit card debt, you may wish to concentrate on consolidating those debts first, as they are probably costing you need more training. 
2. Compare the rates of private student loan consolidation: The interest rate for private student loan consolidation will be determined by several factors. If you have improved your credit score since you bought the credits, you can ensure a favorable fixed rate that you originally offered. Shop aroundfor a consolidationloan and talk to different lenders about your options. Often banks will offer a lower fixed interest rate if you set up an automatic draft to make your monthly payments from your bank account. Others offer a short deferment after the loan is approved before requiring repayment to begin. Try to obtain a loan that carries no penalty for repaying it early. You can save on the interest rate by sending extra payments towards the loan’s principal throughout the year. This is also a helpful tip for repaying your educational debt sooner.
3. Put forth every effort to repay your student loan debt: Never underestimate the importance of repaying your educational loans, regardless of how long it may take you. Failure to meet this obligation can cause many problems for you in the future, starting with requests for immediate repayment of the loan in full and moves toward wage garnishment, as well as severely damaging your credit score.Your studentloans are often the first foray into the financial world, and are very important for this reason alone. Making it a habit from the very beginning to repay your debts, starting with your educational debts, can shape the correct attitude in your life towards debt and lay the framework for a successful financial future.Your credit is only as good as the trust lenders have in you. Private studentloanconsolidation can help you maintain that trust by fulfilling your obligations. You may have difficulty qualifying for automobile loans, home loans or other types of credit in the future if you do not attempt to repay your studentloans. Also, while studentloans do have more flexibility than other kinds of debt, there is one way that they are the worst kind of debt: They never go away. Not even filing bankruptcy will clear your studentloan obligations.Visit : Best Consolidating Student Loans Student Loan Interest This entry was posted on Wednesday, December 1st, 2010 at 8:59 pm and is filed under Compare Student Loan Consolidation Articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.