3 Student Loan
Consolidation Program Tips
1. Shop around.
Student Loan consolidation rates will be different from one lender to another. There are websites that
have comprehensive lists of the benefits offered by student consolidation loan
programs.
2. Pay off your
loan as early as possible.
3. If you have
variable rate Stafford loans consolidate no later than 6 months after you graduate.
There are a few
things to keep in mind if you want to save money with your student consolidation loan: How long will
it take you to pay off your loan, the type of loan and loan standing.
Tip 1-Due
diligence
First let’s talk
about the interest rate. In order to get the lowest payment possible, you’ll need to first have the
lowest interest rate. Consolidation loans are fixed. Once it is fixed it cannot go higher, but it can
go lower. Often times you are offered an opportunity to lower you interest rate.
The main two
benefits offered by student loan consolidation programs are for consecutive on-time payment and direct
withdrawal. The on-time payment benefit is simple. If you pay each month as agreed upon automatically
your interest rate will be lowered. Here’s an example Lender A gave you a loan with 5% interest rate.
Lender A will give you an interest rate reduction of 1.25% for consecutively making your payments
on-time for 24 months. This means that after 24 months of making your payment on-time the interest
rate will drop 1.25% creating a new interest rate of 3.75%, a huge money saver over the
long-haul.
The second benefit,
direct withdrawal is even easier. Set up a monthly automatic direct withdrawal from your bank account
and receive an interest rate reduction. The interest rate reduction will generally be anywhere from
0.25% to 0.5%. Automatically, each month the loan consolidation program will take your monthly payment
out of your bank account. In return, the lender will drop your interest rate.
Tip 2-Pay off Your
Student Loans as Early as Possible.
Tip 2 pay off the
loan sooner than later. The sooner you pay off your loan the more money you’ll save. If possible, I
suggest paying more than your monthly dues. Here s an example, let’s say you have picked a student
loan consolidation program and you have $60,000 in student loans with an interest rate of 5.5%. You’re
given an option to take a consolidation loan with 10 or 30 years to repay. Which option will you pick?
Well the choice is up to you,
Here’s what you do.
Waiting to 10 years to pay your loan off you’ll have to pay about $90,000. Pay off a $30,000 year loan
and you’ll pay about $120,000, that’s $30,000 difference. Save yourself some money by paying off your
loan in 10 years.
Tip 3-If you have a
Stanford Variable Rate Loan, Consolidate it
The 3rd tip is get
the Stanford Loan consolidated no more than 6 months after you graduate. If you have variable rate
Stafford loans the interest rate will rise 0.6% 6 months after your graduate. You can find out the
status and type of your loan by calling your financial aid department at your college.
Follow these three
easy tips and you will save money.
By: Vernosha Anderson
Find Tons of Money
