When graduating from college, the average American student is has a debt of around 40,000$ with this amount increasing up to 60,000$ if we are considering a graduate school as well. It is safe to say that if you are experiencing problems with your student loan debts you have more than one loan. As your academic career extends by taking more courses or semesters, you may be forced to turn to private lenders when federal loans can’t be in charge of the money you loaned anymore. An excellent solution for dealing with multiple student loans is student loan consolidation. Further on, we are going to take an insight on what consolidation means, how does it work and which are the best sources to get help from. Student loans are confusing, and they dont have to be. Student Loans Resolved offers student loan consolidation help and solutions only one click away in an effective and easy to understand approach.
What is Loan Consolidation?
What Loan Consolidation does is pretty simple: it merges all of your student loans together, for a more significant amount of money and possibly from a different lender. What’s good about debt consolidation is that it makes things easier for you and also cheaper, saving you from paying multiple taxes and fees. A useful side-effect of the consolidation procedure is that it is keeping your space as well. Combining your student loans saves you tons of paperwork and documents that you need to take account of up to seven years after making your repayments.
However, consolidation can have two approaches: you can either borrow a Direct Consolidation Loan from the Education Department, that applies for federal loans, or you can get a student loan refinancing that works for both options.
The Consolidation Loan in a Direct Approach
This approach is good for federal loans because most of them can qualify and they are free of charge. When you use for federal loan consolidation, you can choose the terms of your new loan again.
You can choose terms as loans as 30 years that can decrease your monthly fees. Extending the dates of your contract can make you pay more interest in time. The federal student loan consolidation can increase the rate of your loan, and by consolidating it, the new interest can go up by one percent compared to the old one. This method can reduce your costs, and it can be also more accessible to you.
Student Loan Refinancing
Another student loan consolidation option is refinancing. Both private and federal loans qualify for this, and you can do it with the help of a private lender. Loan refinancing means that your investments are combined into one with a lowered interest rate. Having good credit or excellent and steady payment is making everything easier for you, and it makes it possible to qualify for decreased rates on your new refinanced student loan.
Besides, refinancing allows you to manage your debt in a new way by choosing out new contract terms. The contract period can be shortened so you can become debt-free faster or by extending it, your monthly payments can get lower.
Companies like SoFi or Earnest, with a huge online presence, offer you both fixed and variable rates and flexible repayment time intervals up to 20 years. When considering refinancing, researching for the best offer can save you a lot of time and money to make sure you are comparing offers before choosing the one that fits you the most.
Student Loans Resolved is one of the best options you could choose. We reliably offer professional expertise, putting our clients first. Take a look at our website or contact us right away for free online consultations and let us help you become debt-free.
Consolidation: Pro vs. Cons
Keep in mind that there is more than one type of loan available and that there is a big difference between federal loans issued by the U.S. government and private loans, that are issued by lending agencies, banks or credit unions.
Both options have good and bad sides to them, below we will present both positive and negative facts that belong to loan consolidation.
It is simple for you: Student loan consolidation makes the whole process easier for you, having to worry about only a couple of payments per month with the same number of accounts that you need to focus on. A lot of sources advise you not to mix federal loans and the ones coming from a private environment and rather separate them in different accounts. If you can’t remember when you should pay your bills, and you can not control the investment process this keeps you organized, therefore, you will not miss paying any of your bills.
Lower Bills: Consolidation can decrease the student loan fee you pay every month with a decreased credit rate and more extended pay-back time, depending on your contract for your first loan. This can help you if you can not keep up with your bills and at the same time, you are not eligible for a deferment or salary-based pay-back plan.
Better terms: if you are a college graduate and you have kept your credit balance in check, and you did not miss your payment dates, your credit score can increase. If your credit score improved since you first qualified for a loan, you could be eligible for a lower student loan, and your lending agency will take you as a more responsible and less risky candidate than you were before. For a lender to not consider you a risk anymore, you should check your account or loan credit history, the amount of money your loan is worth, and the rates your future carrier has.
Cons of Consolidation
Losing several options: you can lose some of your borrower rights depending on the loan you chose if you merge the loans: loan forgiveness and variable or income-based plans are good examples in this case.
Rates can change: When choosing a private lender for your loan consolidation plan, the agency can offer you lower interest rates that can also vary in time. This means that the rates can grow in time, therefore, your bills as well.
Therefore, checking all these consolidation options before selecting one, should be carefully done after researching your options.
Student Loan Consolidation Sources
When speaking about selecting a consolidation source, there are many options from where you can pick: banks, private lenders or online creditors; they are all trying to get you. The hard part is: how do you know which one is the best for you?
Companies like Earnest or SoFi were proved to be the best choices to go with from this sector due to low rates, radical flexibility for monthly payments and incomes, unemployment protection all if you reach the minimum criteria needed in general for loan consolidation. Landkey, Commonbond, and College Ave are also very good rated.
If you are looking for a regular bank for your loan, you can go with Citizens Bank, that approves loans for undergraduate students as well.
The third option when choosing a consolidation is credit unions, Pentagon Federal Credit Union being the best choice. They offer low rates and dont charge prepayment fees, but you need a credit score averaging 670 to qualify.
In conclusion, there are many sources to choose from when we are talking about Student Loan Consolidation, and you can select one only after doing your research and getting some tips from authorized help. Even if the process seems problem-free, unexpected setbacks can always show up, and that’s why the essential thing about consolidation is understanding how it works and what it implies.
At Student Loans Resolved we are offering you all the information, you need when checking for all the Student Loan Consolidation sources and we are helping you to choose the one that fits you best. Whether you are reviewing our website or contact us, we are going to offer you our help right away, efficiently explained. Let’s team up and make you debt-free; contact us now.