Consolidate Student Loan – Don’t Lose Control Of Your Payments

By Sean Longford

Are you aware that you can consolidate your student loan? It is practically impossible to get a decent job these days without a college education and for many—especially those with multiple degrees—this means that by the time they graduate they are weighed down with a bunch of student loans. Although loans are a necessary evil for just about everybody that wants to get through college, they can quickly spiral out of control if you can’t keep up with the payments. In such cases, consolidation is your best bet.

All it means when you consolidate is that all of your student loans are “bought out” by a lender (possibly even the lender that holds your current loans) and pulled together into one loan. You are then able to pay on all your loans in one monthly payment, rather than a bunch of smaller payments. You save money in the short term because you are making lower monthly payments, but it will be over a longer period of time.

Before you consolidate there are a few things you have to realize. The first thing you have to understand is that you do have to actually qualify for loan consolidation, which means that you have to be in good standing on all your student loans. To be considered “in good standing” you need to have made three full monthly on-time payments on each of the loans that you want to consolidate or still be within your post-graduation six-month grace period. By making your payments on time you demonstrate that you are responsible and this boosts your chances of being accepted for consolidation. Remember that your lender will treat you as if you are applying for an entirely new loan and will consider the risk involved in dealing with you, your responsibility, and your reliability.

Another factor you have to think about is that consolidation will cause you to pay more money for your loan in the long run. While you do save money immediately, the accumulated interest will ultimately cost you more over the life of the loan. The smaller payments help you deal with all of your other monthly bills and expenses in the short term but interest continues to build on your loan all the while. What this boils down to is that you are only going to be paying a little bit a time on the principal (the full amount of your loan, not counting interest or other fees). Most of your monthly payment will actually be going towards paying on the interest on your loan, which means that it will take you longer to pay it off.

Conclusion

If you are saddled with a bunch of student loans, you should definitely consider consolidation. Consolidation helps you handle your student loans because it allows you to make one large monthly payment on one loan rather than a bunch of small payments on several loans. This payment will also generally be for a smaller amount than what all of your smaller payments would be added up. Consolidate your student loans today and help yourself.

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