Is Student Loan Consolidation Right for You?
The benefits of student loan consolidation.
Whether you’re a student who doesn’t even want to think about your student loans yet or a college graduate in the midst of repaying all of your student loans, student loan consolidation may be for you.
A Downward Spiral
Let’s face it, student loans add up quickly and if you can’t afford to make your monthly payments on time, it can affect your credit. It can even affect your tax returns and your social security benefits. If making your monthly student loan payments is a struggle, student loan consolidation may be your only answer.
Student Loan Consolidation to the Rescue
The Federal Direct Consolidation Loan Programs are impressive student loan consolidation programs that offer you an easy way to manage the repayment of your federally guaranteed student loans.
The program was established by Congress and was meant to make repayment of student loans easier on graduates. This student loan consolidation program allows you to combine all of your eligible Federal education loans into one single loan, usually resulting in a lower monthly payment.
There are a number of reasons why you should look at these student loan consolidation programs.
The Benefits of Student Loan Consolidation
The first and foremost benefit of student loan consolidation is lower monthly payments. By lowering your monthly payment and freeing up some cash flow, you’ll be better able to afford your student loan.
One Monthly Loan Payment
Student loan consolidation also enables you to make one monthly payment rather than several monthly payments on your student loan.
A Low Fixed Interest Rate
This type of student loan consolidation program mandates fixed interest rates that are not to exceed 8.25 percent at any given time. This is a great benefit, especially if your current student loan is a variable rate loan and interest rates are rising.
No Credit Check or Processing Fees
One of the biggest benefits of this type of student loan consolidation is that there are no credit checks required. The application is rather simple and there are no application or processing fees associated with this type of student loan consolidation.
Two other opportunities for savings present themselves with the federal student loan consolidation programs. First of all, there is no prepayment penalty. That means if you pay your loan off early, you’re not required to pay a fine.
You can also save money to the tune of .25% off your interest rate if you opt to have the payments for your loan taken out of your checking account electronically.
While student loan consolidation may not be a viable option for those who only have a few hundred dollars left to pay off, it makes a lot of sense for anyone who is having trouble meeting their monthly student loan payments or anyone who wants to consolidate their student debt.