Digital News Report – When the reality of paying back multiple student loans each month hits, you might be coming up short for other necessary living expenses. That is why some people might consider a student loan consolidation. A student loan consolidation involves combing a number of loans into one new loan that has new interest rates and specified repayment terms.
You might want to refinance your student loan because you have a variable interest rate loan, which means that your interest and monthly payments could go up at specified times. You should check to make sure if you have a fixed rate or a variable rate student loan. If you have fixed rate, find out what that interest rate is, which will never change. If you refinance your student loan and consolidate it, ask yourself if will you have a new lower interest rate?
If you have some of the student loans with a variable interest rate, this could affect how much interest you will have to pay when you consolidate them into a fixed rate student loan. New variable interest rates for some of the Federal loans are published each July 1st by the Education Department. This data could be related to what the new interest rate will be set for the student loan consolidation.
The FTC recommends that you take your time if you decide to consolidate student loans into one, and to read the fine print that the lenders have set forth. Some lenders may lower the interest rate on the student loan consolidation only if you agree to make automated payments from you banking account. Others may discount the interest rate on your student loan consolidation only if it you have met the predetermined minimum loan balance. Some lenders may only offer a lower interest rate only when you keep your payments on time for the lifetime of the loan.
You should also consider that when you consolidate a federal student loan along with private student loans, you lose the protection offered by the federal student loan programs. If you consolidate a Perkins loan you would lose your unique deferment and cancellation rights that is available through that loan program.
Benefits to undergoing a student loan consolidation is to lower the monthly payments on your loans, as well as getting rid of variable interest rates loans which can change the amount you owe from payment to payment. You possibly could lower your overall interest rate as well.