student-loan-consolidation-rates
 

 

 

 

Best Student Loan Consolidation Rates


     

 

Having so many student loans can give a student a lot of headach and can be quite a hassle when a repayment starts after when student gets graduate. It can be very difficult for many students to manage many loan repayments.           

 

What is a Student Loan Consolidation?


A student loan consolidation means having all your student loans merged into one account, with a much more manageable payment plan. Usually, the rate of a consolidated loan is also lower and therefore, a huge help to those already under a financial strain.   

Why should you consolidate your student loans?

There are a lot of advantages to consolidating your student loans. Instead of multiple payments, each with their own high interest rate, consolidating puts all your existing student loans into one account. There is only one monthly payment and the interest rate is normally lower than what you were already paying when these accounts were separate. The rate is a combined average of all your loans and many people who have consolidated have found a savings of nearly 20% off what they’d been paying before merging their student loans. 

It is also easier to keep track of your loans and the progress you are making in repaying them, as you will have only have one set of paperwork to read over and one manager to deal with. Because rates at an all time low, it is a perfect time to get a fixed number by combining your student loans and guaranteeing how much you’ll end up paying over the lifetime of your loan. 

What types of loans are eligible for consolidation? 

Nearly all of the student loans that are eligible for consolidation are federal loans and include: FFELP (Stafford, PLUS, and SLS), FISL, Perkins, Health Professional loans, NSL, HEAL, and also Guaranteed Student loans and Direct loans. Currently, Private student loans are not eligible but many lenders offer private consolidation loans. You should consult with your financial advisor for all available options. 

What kind of consolidation rates can you expect? 

A consolidate rate is based on what you were already paying. For example, if you had two loans, their rate of interest would be merged together for an average rate. Here’s an example of how it’s actually added: (The .75 is the size of the loan, meaning three quarters of your total debt is that particular loan.) 

7% x .25 = 1.75%
plus
9% x .75 = 6.75% 

New Rate = 8.50% 

Another big saving comes in if you have PLUS loans, which are now capped at a maximum rate of 8.25%. If your current rates are above that for PLUS loans, consolidating them could bring a big drop in your monthly payment. 

Helpful Information  

Until 2013, graduate Stafford Loans, subsidized and unsubsidized, have a fixed interest rate of 6.8%. Those loans disbursed before July 1, 2006, will be variable until consolidated. 

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