Tuesday, 22 September 2009

When to Consolidate Student Loans?

If you have completed your studies just recently, then amount of huge debt can be a matter of concern for you especially when you are yet to get a job. Student loan consolidation is a great way to reduce the debt which many of you have taken under student loans.

In consolidate student loans, although the principal of the loan will not be affected, you can lock in the interest rates to a fixed rate and thus reduce your monthly payments and make it substantially better. You can reduce your monthly payments by up to forty percent. Plus, you might be able to stretch out your payment time to decrease your monthly payment amount even further. Its more or less like housing refinancing loan scheme.

But when you consolidate student loans during your initial six month grace period, you must start making your payments right away. Otherwise it can be difficult especially incase where you are unable to find a job after graduation. Although you can wait until just before the grace period ends to consolidate and still receive the lower rates. Another disadvantage of consolidated loan is that once you have consolidated your student loans, you cannot un-consolidate them again. Hence, it’s recommended to consider your choice carefully before opting foe consolidated student loans.

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