Student Loan Consolidation Options Before Combining Bills

Monday, September 30, 2013

Most people with student loan debt have considered federal loan consolidation in order to get financial relief from monthly payments. Most people have multiple loans that tend to burden the budget as separate payments. When multiple payments are condensed into one loan with one interest payment budgeted costs are better capable of handling the monthly demand. Oftentimes, the excitement of budget relief will cloud the downsides of consolidation.

Before you consolidate federal loans, consider other available routes. You may end up putting off consolidation or a later date or choose different options which will provide more savings.

* When debt is consolidated into one easy payment, the interest rate for the new loan is calculated as the mean of all applicable loan rates rounded up by one-eighth percent. In order to make the loan affordable, the term length is often extended in order to make smaller monthly payments. The interest may be an affordable cost each month, but you will pay more in the long-run by accruing year's additional payments. You will want to work your student debt consolidation in your favor.

* Are you aware of potential benefits which may be lost once you consolidate your student debt? Loan forgiveness programs for Perkins loans will no longer be applicable once debt is consolidated. If you are a teacher, nurse, law enforcement personnel, Peace Corps or military member as well as other public service workers could lose out on having part of their total debt cancelled. People who do qualify for loan forgiveness will want to make their 120 on-time payments before considering consolidation. You may want to consider qualifying for loan forgiveness and Income-Based Repayment Programs instead.

* There are many ways to attack repayment. Depending on your loans and rate of interest, you may find a method to repay your loans at a much lesser long-term cost than consolidation.

* Consolidating loans from both you and your spouse could get very tricky if the two of you ever split up. This pertains to federal and private loans. No one ever thinks about their marriage ending, but 20+ years on your loan term is tough to predict relationship wise.

Examine your debt. Analyze each loan individually. If your largest loan also carries your smallest interest rate, you may not want this debt in a consolidation program and end up paying a higher rate during repayment. Consolidation is a permanent decision. It omits other benefit opportunities. If you are considering consolidation, take your time and examine all relief plans in order to collect on the most federal student loan relief benefits.

There are professional paid services, very similar to hiring someone to do your taxes that will analyze your student loan portfolio. Find a company like NSLR that will guarantee their relief services. You want to take advantage of all eligible benefits without losing options.