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Consolidating student loan debt

Discussion in 'Student loans' started by Mike, Dec 11, 2015.

  1. Mike

    Mike Administrator Staff Member

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    Consolidating your student loan debt can help make your monthly payments manageable by either altering the repayment timeframe or, for private loans, lowering your monthly interest rate. Whether you have federal or private loans, there are several options available to consolidate your loans and ease the burden of education-related debt.

    What to Consolidate
    Traditional loan consolidation is available for both federal and private loans. It is important to note, however, that consolidating federal loans does not lower your interest rate, it just allows you to make one simple payment. This is because federal rates are fixed and when consolidating, the servicer uses a weighted average of all the loans to create a single new interest rate.

    While you can transfer federal student loans to a private company, the rates are usually much higher so it’s most likely better to keep your federal loans. Consolidating your private loans allows you to refinance the interest rate of several loans, ideally lowering your monthly payment amount.


    When to Consolidate
    Consider consolidating your private loans if you’d like to lower your monthly payments. Because private lenders base their interest rates on your credit history, you may qualify for lower rates if your credit score has increased or if you’ve simply established credit since taking out the loan as a student. Many pre-approvals only require a soft inquiry on your credit report, so you can preview your rates without actually affecting your credit.

    Another time to consider consolidating is if your loan has an adjustable interest rate. If your rate is about to go up or has already done so, shop around for fixed rates that will give you a stable monthly payment amount. Finally, consider consolidating or refinancing your student loans if you have a cosigner on your loan.

    You can usually apply to have this person removed from the responsibility of your debt after you’ve worked for a few years, have a steady income and have made consistent, timely payments on your loan.
     
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  2. Angelbox

    Angelbox Guest

    Im in the process of trying to get my federal student loan payments deferred while I undertake my very first TEFL venture. It sounds almost too good to be true, but Ive been told that one can qualify for something called an Economic Hardship Deferrment if ones income is below a certain level. Yes, if anything qualifies for economic hardship, it seems teaching in Costa Rica would top the list, next to unemployment

    Anyhoo, I have a backup plan if this fails, but it sure would be nice to have one less thing to worry about back home. Anyone out there tried to defer loans? How did that work out for you?

    If Im successful wont know for another month or so, Ill post the good news here. It seems student loans are a big concern for many of us who overpaid for a mediocre education. But I digress...if Im not successful, Ill still post it here. Ill be sure to rant extensively about how unfair it is, and Ill post in all capitals because we all love that dont we?
    Melissa
     

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