Students and parents who have recently experienced graduation or who are about to experience graduation soon may want to consider college student loan debt consolidation. We will take a brief look at why consolidation might or might not be a good idea depending on your particular circumstances.
Students and parents both have been very fortunate over the past few years to have enjoyed some extremely low interest rates when taking out student loans. For those students and parents who locked in fixed low rates then consolidation is probably not for them, the exception being, the need to expand the term of the loan to lower the monthly payment. Students should think long and hard about giving up favorable rates simply to get a smaller payment over a longer term.
As rates have been at historical lows for the past several years, it is my opinion that the only scenario which may call for refinancing is if one has variable rate loans. In today's economic climate it seems that only possibility for these rates is for them to be adjusted up. If a student has a substantial amount of student debt the uncertainty of rising rates and annual adjustments to rates are good reasons to consider consolidating debt at a fixed rate. The benefits of being able to plan one's economic future are made much easier when one knows what their debt is and what their payments are going to be. Please realize that you will most likely get the same low rates that you have but at least you will know that they will not continue to go up.
Another benefit to consolidating student loans is that it may affect your credit score in a positive way. How you may ask? Well if you consolidate your loans you are in fact paying off your old loans to take on the new consolidated loan. This may be reflected positively on your credit rating. Also, it is just easier to make one payment than to make several. When considering whether or not to consolidate loans please do the math and calculate what is best for your specific case.
Written by Howard Gottlieb
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