Consolidating Loans After Graduation

Managing Student Debt

<b>What is consolidation?</b>

To consolidate your student loans means to take all of your various loans and give them to one company. A great benefit of this is a lower monthly rate.

<b>Benefits:</b>

That's only one benefit of consolidation. Listed below are a couple more of them:

-Stop writing 4 different checks: Forget writing three or four different checks to your various lenders! Consolidation makes it possible for you to write just 1 check.

-Smaller fee: Find a lender that will charge you a lower monthly interest rate and let them consolidate your loans.

-Raise your credit score: Once you choose to consolidate, your lender pays off your previous debts and merge them to generate one new one. Since your old loans were fully repaid, your history looks better which, consequently, improves your credit rating.

-Lock in low rate: When you consolidate your interest rate is locked in. This protects you from future increases.

Consolidation loans are great because they are easy to get. You are not required to be employed, have collateral or a cosigner. Furthermore, good credit is not needed!

<b>Disadvantages of Consolidating:</b>

Before you run off and consolidate your loans, consider the following. Every choice generally has a downside. Check out all the pros and cons of consolidation before you do it. The following is a list of some disadvantages:

-Sometimes interest rates fall. If you chose to consolidate, your higher rate will be locked in.

-As soon as consolidation you cannot "unconsolidate".

-The consolidated loan will have new terms and conditions that your other loans didn't.

-If you choose to extend the life of the loan you will wind up spending more (in interest) than you would have.

Now that we have shown you the pros and cons of student loan consolidation, you should find out if you can get one. There are very few requirements to qualify for federal student loan consolidation. You have to owe more than $10,000 in outstanding federal student loans. You must be graduated as well. Finally, you must repair any defaulted federal loans before you will be allowed to consolidate.

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