Consolidating Private Student Loans Can Save You Money

Now is the time for consolidating private studentcount. And once you sign the agreement, you are
loans. The prime interest rate, which many loans areobligated to the conditions contained in the contract.
based on, is at the lowest point in years (3.75%). IfMake any decision based on the facts you know
you originally got your loans in the past few yearstoday, not sometime in the future. Read and
they may be as high as 8% or more.understand every page of any document that you
Consolidating your student loans can help you savesign. It might be a good idea to have someone with
money and even give your credit score a boost. Letsknowledge in loans and contracts to review any
say you have anywhere from 4 to 8 student loansdocuments before you sign on the dotted line.
that you are paying back right now. When youKeep in mind that you may not even get the 3.75%
consolidate them with one loan, the individual loansinterest rate offered. The interest rate you are
are paid off. That's always a good thing on youroffered is based on your credit score. Which is based
credit report.on your payment history, amount of available credit
Depending on the term of your student loans (usually(if you have several credit cards at or near your
15 or 30 years), the savings can be substantial. Letscredit limit, that lowers your available credit), and
say you have $30,000 in multiple loans at 15 yearsother variables.
and 6.8% interest. Your monthly payment would beIf you are just out of school and don't have any
$267. If you consolidate all of the loans into one forcredit built up, or worse yet, have trashed what little
30 years at 3.75%, your payment would go to $139credit you did have, it's time to make some changes.
per month. If your current interest rate is at the maxAnyone can improve his or her credit score with a
of 8.25%, your savings would even be more.little time and effort. It's also going to be important
That's almost a savings of 50% off your payment.when you get to a point where you want to buy a
Even if you opted for the 15-year note, you wouldhouse.
still save up to 20%. Depending on your amount,With interest rates down at the lowest points in
which is probably more than $30,000, the savingsyears, the opportunity will never be the same to
could be very impressive on any monthly budget.reduce that college debt. If that means you need to
Combining all your loans into one also saves you a lotwork on your credit score, so be it. You are now in
time and headaches when you make payments andthe real world and reality is very difficult to avoid.
record keeping. But you also have to be careful.Your credit score is very important when it comes to
There are a lot of companies that will be more thanunsecured loans (since that's what most consolidation
willing to loan you the money, but the devil is in theloans are). The higher your credit score, the lower
details.interest rate you will be offered in any consolidation
Some start off with low payments, then balloon atloan. In fact, you may not even be eligible without
certain periods (say at 2nd, 5th, and 8th years yourthe minimum credit score.
payments go up) based on the position that yourIf you need help with improving your credit score
income will increase also. This can be dangerousthere are a lot of free options available. Look for
depending on many factors not in your control.community or church programs that offer free
When considering any consolidation loan, look at theassistance. If you need to establish credit, there are
total debt. Look at all the fine print on time periods,ways to do that also but it takes time. But the
payment schedules, and any penalties. Don't takemoney savings will more than be worth the effort.
anything for granted, if it's not in writing it doesn't