Consolidate Your Student Loans - 6 Key Reasons to Take Control of Your Financial Future

Consolidate Your Student Loans - 6 Key Reasons to Take Control of Your Financial Future

In today's academic world the majority of students have in excess of $20,000 worth of student debt by the time they graduate from college. This significant amount of money may naturally make life difficult at a time when you may have no job to go to or initially a low-paying job as your first step on the career ladder. Often the student debt will be spread across a number of different loans, possibly both federal and private and there is a need to manage the debt sensibly and to ensure that you pay as little interest as possible over the term of the loans.
Consolidation of student loans is a natural step to take to manage this issue, although you must not consolidate federal and private loans into one loan, otherwise you will lose your federal benefits, such as deferment or subsidised rates. Anyone who took out federal Stafford Loans, Federal Direct Loans and Perkins Loans while attending college is eligible to apply for federal student loan consolidation.

6 Reasons to Consolidate Your Student Loans

* Rather than standard 10 year loan terms, a consolidated loan can be stretched over 30 years, if necessary, allowing you to significantly reduce your monthly payments - by up to 50% - at a time when finances are tight. This in turn leaves you with more money to meet day-to-day expenses.

* By reducing your monthly payments, this can lower your debt to income ratio and therefore improve your credit score.

* Interest rates are currently as low as they have ever been and therefore you could fix your monthly re-payments at a very low interest rate.

* A consolidated loan leaves you with only one loan to manage - this is more manageable, less stressful and importantly leaves you feeling more in control of your finances.

* Most consolidated student loans do not carry penalty charges for early repayment, so that as your career progresses and you are able to pay off bigger chunks of your loan, you will not be penalised for doing so.

* Since July 1 2009 students may be eligible to take advantage of a new government program that bases the student loan repayments on income.

Therefore, if you currently have eligible federal student loans - totalling in excess of $20,000 - the loans are not in default, and the borrower has graduated or is enrolled less than half-time, then it makes a lot of sense to apply for a consolidated loan.