Consolidation of student loans is a refinancing program, which allows you to integrate all of your existing student loans into a single loan. It does not require application fees, co-signers, or credit checks in order to be availed. You can obtain several benefits when you avail of this kind of loan.
First, consolidation of student loans offers lower monthly payments as well as longer term for repayment. This allows you to use your other funds for your personal expenses such as food, car, utility, credit card, rent, or mortgage payments. You could also decrease you monthly payments of up to 53% depending on how much your total balance is. You can make larger payments as you wish since no penalties are required for extra or early repayment.
Second, you can lock in a low fixed rate of interest for the term of your loan if you avail of consolidation of student loans. This is a much better option as compared to the current unconsolidated federal student loans that vary in interest rates.
Third, you can customize your mode of payment when you avail of student consolidated loans. You can have the chance to choose the best payment plan that is suitable for your current level of income. Plans under the student consolidated loans such as the graduated repayment plan start out with lower interest rate for the first few years and gradually increases to a level of repayment plan. This can be helpful especially if you need payment relief as you graduate from school.
Fourth, through consolidating your loan, you only pay once per month. Thus, you discard the need for multiple monthly payments for each of your federal lenders by writing only one check per month. In addition, if you avail of the automatic checking account withdrawal, you will save as much s .25% on your rate of interest while making your payment mode simple.
Fifth, you can retain your forbearance and loan deferment benefits by consolidating your student loans. You can also keep your interest subsidy benefit through any subsidized direct loans or FFELP you consolidate.
Sixth, through consolidation of student loans, you are able to pay your existing federal student loans in full and combine them into a single loan. Thus, it helps in eliminating open lines of your credit.
Finally, consolidation of student loans saves your money for automatic payments. You are able to decrease you rate of interest through an additional .25% as you have your payments deducted from your checking account. More so, an additional 1.00% reduction for specific loan balance sizes can also save your money after making 36 payments on a timely manner.
You can consolidate your student loans during your loan repayment or grace period. Before your loans reach repayment, you have a grace period of 6 months no-payment window after you drop below half-time enrollment or after you have graduated. If you consolidate your student loans within your grace period, you obtain a .6% discount once you have completed your consolidation.