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Five Things to Know About Student Loan Consolidation

Having a number of student loans with variable interest rates, different repayment dates, some cosigned and some not, all with different terms and conditions, can get unwieldy. Student loan consolidation is an option.

Once they are graduated, many past students can find themselves juggling two or more student loans. This makes sticking to a budget and not incurring late fees a real nightmare. A strategy is needed to get these multiple bills under control. It would be wise to consider student loan consolidation.

Student loans may be drawn on different institutions, each may carry a different interest rate, some may have a cosigner while others do not, payments may be due at different days of the month, and other terms and conditions may vary wildly.

One payment, on one specific day, to one institution, with one interest rate, with one set of terms and conditions, could make life so much easier and budgets so much more manageable. That is the effect sought from student loan consolidation. Following you will find five items you need to consider when deciding whether or not to consolidate your student loans.

1. Minimum Amount

To qualify for most student loan consolidations, the outstanding debt on all of your loans should be at least $5,000 or thereabouts.

2. Continue Payments

The wise thing to do when applying for a student loan consolidation is to continue regular payments to the various institutions presently holding your loans. The whole consolidation process can take up to forty-five days. Making no payments during that time could damage your credit rating and perhaps have your consolidation institution think twice about offering consolidation. Check with your prospective lender.

3. Removing Co-Signers

Good old Dad or poor Aunt Mary may be lingering as co-signers on one or more of your student loan contracts. Now that you are gainfully employed; why not get them off of your student loan contracts? This possibility can become a reality if you have proven your own creditworthiness by making timely payments over the last twenty-four to forty-eight months (depending on the terms of the original individual contracts). This is something you will want to cause to happen before you take your first steps toward consolidation; or check with the loan consolidation institution that you may employ.

4. Consolidation Issues

Shopping around for a student loan consolidation is important to get the best deal. Some very important questions have to be answered before you choose an institution for a student loan consolidation.

To the prospective lender:

What is the interest rate? Does the consolidation require an origination fee? Can I pay more each month without exacting any penalties? Can I pay off the entire loan early without exacting any penalties? What are the terms and conditions? Specifically, size of payment, day of month the payment is due, duration or maturity of the loan. It cannot hurt to ask for some wiggle room (thirty to sixty days) before the first payment is due. (This could allow you a month or more to put your financial circumstance on a more solid setting.)

5. Last Points

The ultimate goals of a student loan consolidation is to reduce monthly payment, establish an acceptable interest rate, have only one payment, and clear all others from your loans. When you establish the duration of your consolidation, think hard about the income and expenses you will be having in the future. Do you see yourself having children or buying a home? And, there could be other considerations.

For most young folksScience Articles, student loan consolidation is wise and important for this main reason one manageable payment per month.

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Melissa Kellett has a Master in Finance and has been a financial consultant for years. She specializes in Loans for Bad Credit people and also in helping people to get approved for Personal Loans, unsecured loans, Guaranteed Unsecured Loans Online, no credit check loans, student loans among many other financial products. Visit her site at

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