Tips on How to Get the Best Student Loan Consolidation Rates

Many students are facing tremendous student loan debts. If you find yourself seriously considering consolidating your various students loan into one, here are some important tips that you have to consider in getting the best student loan consolidation rates.

What is a student loan consolidation rate? It is one of the most important factor that will determine the cost of borrowing money that will assist you in getting a higher education. Different companies offer different rates. Before you make any decision which institution where you want your loans consolidated, you have to analyze the interest rates they offer.

First, the rate in compounding the various loans should be lower than any of the individual loans. It would definitely be to your advantage if you can get the lowest interest rate there is. As you compound these loans, you will be getting one single loan with a single rate and a single payment every month. Depending on how long you want your repayment period to be, it will help you determine exactly how much you will be paying as a whole. A lower interest would mean a lower total payment.

Interest rate use to consolidate your loans should be fixed; meaning the rate you started out with will remain the same for the whole period of the loan. It is unavoidable due to the market trend that interest rates will go up in time. So even if you take advantage of a more competitive rate, there is a chance that it will increase and you will end up paying a bigger amount of money. You wouldn't want this to happen. Securing a loan with even the slightest difference in interest rate can save you money.

While shopping for consolidating firms, it is also to your advantage if you can ask for additional benefits from lenders. There are some who offers extra bonuses especially if you are up to date in payment or you signed up for an automatic withdraw payment from your savings or checking account. These slight interest rate discounts can be helpful in saving you money while you pay off your loan.

There are many lending institutions who offer consolidation as a means for you to get out of your financial setback. However, it is still to your advantage that you should take the time to scout for one that offers a competitive interest rate that will save you money in the long run.

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Private Student Loans - Considerations For Consolidation

If you have outstanding private as well as federal student loans, to take advantages that each has to offer, when you consider consolidation you should do them separately. Federal loans usually have lower interest rates, so consolidating them is another sort of ball game.

Consider That They Are Rolled Into One

The amount of your consolidation loan is not a big issue, it simply reflects the amount you need to pay off all of your private student loans. This is a figure you have probably had in the back of your mind anyway. It is what the cost will be so you will have a new single payment. But, understand, that the single loan will probably require far less for each monthly payment than you are making for the sum of two or more other loans that you may be presently carrying.

Consider The Benefits

What you are basically doing is having one payment, to one lender, on one day of the month, at one interest rate, at one payoff date. Having different payment amounts, to different lenders, due on different days of the month, at different interest rates, with different pay off dates, well, you will save money on postage and envelopes alone.

Consider Your Weighted Interest Rate

Speaking of interest rates, if you have been paying your various loans regularly, you should be able to get an interest lower than that of your various loans. If you have improved your credit rating by just 50 points, you should be eligible for more competitive rates. Online you can find weighted interest rates calculators that will give you an average of the interest rate among loans you are presently carrying. This will help you negotiate a reasonable interest when you go for your private student loan consolidation.

Consider Your Current Lenders

Although it is prudent to shop around for the best rates on consolidating your private student loans, you may want to speak to one of your loan holders you are presently paying. They may be more than willing to work with you. Nevertheless, be armed with quotes from other lenders so you have some ammunition when you negotiate the consolidation. Actually, no matter who you negotiate with, it is good to have quotes from others.

Consider a Home Equity Student Loan Payoff

Another way to pay off all your outstanding private student loans would be getting a home equity loan. If you have considerably equity in your home, you could borrow against that equity to pay off any standing student loan amounts. One good thing about this approach is that you can usually lock in an interest rate rather than having to deal with a variable interest rate that is somewhat common in the student loan consolidation market.

Consider the Future

Just because a lender may agree to consolidate you student loans, do not let them think that they are doing you a favor. It is the other way around. You are doing them a favor by giving them your business. Before you sign anything, make sure the terms, rates, and conditions are comfortable. Once you get your private student loans cornered and manageable, you will want to start thinking of ways to reduce the burden of any federal student loans you may be struggling with.

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Let's Count Your Monthly Installment Right Now

If you are a college student, odds are you've a good deal of student loans. The average college student's debt after college is $23,000. For nearly 40% of recent graduates, it may need them over ten years to pay off their current student loan debt. One way to assist recent graduates manage their student loan debts would be to consolidate their loans into one. This could save a lot of time in pay it off, and can even save a large amount of money. The easiest method to find out if this is a good option is to use a consolidation calculator.

It is a tool that will refinance your school loans into one loan that will reduce your monthly repayment by a large amount. Doing so, you possibly can save over $115 monthly on a $30,000 federal student loan. With the use of consolidation calculator, you can also consolidate any private loans you've got. On a $30,000 private student loan, consolidation will save you up to $730 each year.

Consolidating your apprentice loans with this calculator may also give you a lot more time to pay them back. Subject to your loans, you can extend the typical repayment time of 10 years up to 30 years too. And because your monthly payment will be lower, you'll have more money for things such as a car payment, housing expenses, and other little luxuries. Consolidation calculator helps you to keep your payments low and simple to make every month, this can greatly raise your credit score, which can be essential if you wish to have a nice car or apartment.

Most consolidated loans also provide no penalty for pre-payment, therefore if things are going good, you may make a more substantial payment and settle your loan faster if you want. You can do it when it is affordable for you. And all these matter can be tracked with this tool.

Like when you first got your student loan, you'll need to apply to consolidate it. Though the application process is pretty simple and straight forward, this tool can make it further simpler.

This great calculator helps you to roll up all your existing separate loans into one loan once you consolidate. Companies will purchase the loans for much less from the other creditors and thus will often be able to give you a lower rate. The negative effects might be these loans may take much longer to settle, such as the instance of changing a ten year loan repayment to a thirty year loan repayment. It can create a large amount of savings every month, but you can end up paying more in the end, since unless you make use of the no pre-payment penalties and repay a lot more than the minimum monthly payment, you've extended your loan for an extra twenty years. These calculations are tough to do without the use of student loan consolidation calculator.

It can also help you well to understand the implications of interest rates. Its interest rates can fluctuate between 4.75% up to 9% interest rates. Consolidation of these loans doesn't change the interest rate. If a student combines several types of loans and different types of interest rates into one consolidated student loan, a weighted average will be calculated and which will be used to determine the interest rate of the new consolidated student loan.

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Are Student Loans Still a Good Bet?

In the mid- and late-1960s, there was no doubt among U.S. public policy makers that the federal government should be encouraging more citizens to attend and graduate from college.

Bolstered by the success of the highly popular GI Bill, which paid college expenses for military veterans, federal student loans were hailed as a "GI Bill for all Americans." These low-interest loans allowed students from modest means to attend college in numbers never before seen. The college graduation rate, which had hovered around 7 to 8 percent, steadily climbed to today's rate of nearly 30 percent.

Backing the idea that higher education is nearly universally better than entering the workforce straight out of high school were statistics that showed that college graduates, on average, would benefit from as much as $1 million more in lifetime earnings than students who didn't graduate with a post-secondary degree.

At the same time, however, the cost of a college education began to rise much faster than the rate of inflation, meaning that families began to have to devote more of their overall income to paying for college costs. With annual college tuition climbing into the tens of thousands of dollars, college expenses have outstripped even generous incomes, and students have had to turn increasingly to college loans to pay for their education.

Today, about two-thirds of college students take out student loans to help pay for their education. These students leave college with an average of $23,186 in school loan debt, according to FinAid.org.

This figure is less than the average cost of a new car in 2010 ($29,217), and most new car loans are paid off in five to six years, with an interest rate comparable to the rates on federal education loans.

So why are so many people concerned about the cost of college loans?

Simply put, not all college loans are created equal.

Federal education loans are issued directly by the federal government and carry a fixed interest rate, along with flexible repayment terms and multiple options for postponing or reducing one's monthly payments based on one's financial circumstances. Federal college loans are generally low-cost, low-pressure loans.

Private education loans on the other hand, which are issued not by the government but by banks, credit unions, and other private-sector lenders, are variable-rate, credit-based loans that typically carry higher fees and rates than their federal counterparts. Private student loans also offer much fewer, if any options, for financially distressed borrowers to be able to postpone or reduce their payments.

One major difference between a new car loan and a student loan is the deferment period. With a car loan, payments on the principal begin immediately. A portion of every payment is used to reduce the balance owed.

In contrast, all federal education loans and many private education loans allow students to defer making any payments while they're still in school. The repayment of the loan can be delayed for years while the student finishes school - with no delay of interest charges, however.

Except in the case of subsidized federal student loans - for which the government will cover the interest while a student is in school and which are awarded only to students who demonstrate the most financial need - interest begins to accumulate on college loans as soon as the loans are issued, even if a student is deferring payments.

This accumulation may take place over months or years, quietly running up the balance on a student's school loan debt to alarmingly high levels.

Families concerned with accumulating excessive college loan debt can always decline to take on any school loans. Federal college loans awarded in a student's financial aid package are always optional; students can turn these loans down if they have another financial resource and don't want to take on the debt of school loans.

Students forgoing their available federal college loans at the beginning of the school year, however, may end up passing on this government money only to see their financial circumstances change unexpectedly mid-semester. In cases like these, students may be forced to turn to private student loans to bridge the financial gap.

A good strategy for college students is to first seek out college scholarships and grants and then maximize their available federal student loans before considering a private student loan. Private loans should be considered only as a last resort and only for financial emergencies that arise during the semester that other sources of financial aid can't cover.

Students should develop a clear and detailed plan for how they're going to pay their college expenses for each year they attend classes, especially if they plan to decline the federal school loans in their financial aid packages.

Having a backup plan in place to cover unexpected financial emergencies can also help reduce the need for student loans, as well as the overall cost of a college education.

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