Student Loan Consolidation: Better Rates and Terms Are Within Short Reach
So many people drown in student debt, that government has made several steps to regulate student loan consolidation industry. Now it is easier than ever to extend your loan terms and get attractive rate discounts, resulting in lower monthly payments.
Important Things to Consider
There are several federal laws in place that regulate student loan consolidation. It is important to be aware of the guidelines they impose to protect your rights. If you are looking to get lower monthly payments on your student loans, you may achieve it by taking advantage of extending your loan terms and/or reducing your interest rates.
Federal laws allow up to 30 years for student loan consolidation programs. By extending your loan duration, you may be able to reduce the amount you pay each month significantly. It is important to consider that the longer your loan terms are the more you would end up paying in interest charges over the life of the loan. If are looking to lower your monthly payments then the time frame of your loan is mostly likely going to get extended. Therefore, while prolonging your repayment period may be of great help, it is more important to focus on interest rate reduction.
You may reduce the interest rate on your student loans in several ways. First, you may try to consolidate your student debt through a non-profit lender. Since they do not focus on extracting profits from their activities and have lower operating costs, your rate reduction may be quite significant. Another effective way is to try to take advantage of recent legislative changes that allow for discounted rates available with student debt consolidation programs. While such programs often have criteria to meet, such as showing significant financial need, they may well suit your case. Having your payments processed by automatic bank debits is another effective way to qualify for rate discounts, as most lenders offer permanent rate reduction for borrowers who opt for ACH payments.
Student Loan Consolidation Myths Busted
There are a number of misconceptions about student loan consolidation. Many people are under impression that the rates may fluctuate throughout the life of a loan. This is not true at all, as lenders are required by federal laws to give fixed rates on consolidation loans. Another common myth is that student loan consolidation ruins your credit. Financial institutions do not run credit reports for student debt consolidation. In addition, unlike some other loans, student lenders are not allowed to charge pre-payment penalties, allowing you to pay off your loan sooner and benefit from lesser interest charges.
Beware of lenders that tell you that only they are able to deliver special benefits to you, as it is not true. Student loan consolidation is an industry strictly regulated and monitored by U.S. Government, ensuring equal and fair treatment to all borrowers who face financial problems.
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ABOUT THE AUTHOR
Melissa Kellett has a Master in Finance and has been a financial consultant for years. She specializes in Poor Credit Personal Loans people and also in helping people to get approved for Personal Loans, unsecured loans, Bad Credit Loans Guaranteed Approval, no credit check loans, student loans among many other financial products. Visit her site at http://www.speedybadcreditloans.com