3 Student Loan
Consolidation Programs 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
