Should you consolidate student loan bills?
Written by: Pete Glocker
Make the right choice on grace periods, length of loans and
By: Pete Glocker
Let's see here, you just graduated college and got hired at your
first job. It is now a month before holidays and (two, three or
four) different loan companies send you statements in the mail
informing you that you have to start paying on your student
loans next month. You must be thinking, it is the holiday season
and I have to buy gifts and pay my bills. How am I going to
afford to start paying off my student loans? Here is how.
Many recent college graduates choose the option to defer their
loans for six months. That is how long the grace period is for
student loans. It may be a good idea to take advantage of this
option if it took you a while to find a job or if you are
starting out on a low salary. Most entry-level positions do not
offer the highest salaries. However, if you do have a decent
salary job or if your loan is not tremendously high, it may be
smart to start paying right away because the faster you can pay
off your student loan, the easier it would be for you to buy a
house and save money for the future. Remember, you will have to
eventually have to pay back your student loan, so the longer you
prolong paying, the more time it will take you to pay it off and
the more it will cost you in added interest charges.
Length of Loans
Student loan repayments are usually scheduled over ten years.
Lenders can have the option to have floating interest rates on
loans, but cannot exceed 8.25 percent due to Federal Government
laws. So obviously, the shorter the length of the loan; lenders
have less of an opportunity to change your interest rates. Many
lenders give you the option of extending your repayment length.
Students with $60,000 or more in student loans may opt to extend
their payment period up to thirty years. Basically, it is common
since; the shorter the payment period of the less money you will
spend on interest.
If you have three or more different lenders like most students
with the government issued Stafford Loans, it is definitely in
your best interest to consolidate them into one. The reason
being, you can have one loan with a locked low interest rate.
Most consolidated loans have an interest rate of five percent or
less. So instead of paying three different payments with
different higher interest rates, it is best to have one lower
Remember, student loans are a financial obligation that will
affect your credit history and influence your credit score .Be
responsible, pay them off in a reasonable amount of time, pay
them off sooner and you could save thousands of dollars in
interest. The dollars you save could be the down payment on your
About the author:
NonePete Glocker is employed in the Education and Charitable
Services Department at Debt Management Credit Counseling Corp.
("DMCC"), a 501c(3) non-profit charitable organization located
in Boca Raton, Florida. Pete graduated from Florida Atlantic
University with a BA in Multimedia Journalism and is an
experienced web producer for Tribune Interactive products
Sun-Sentinel.com and SouthFlorida.com. DMCC provides free financ
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