| School loans are a necessary evil for most people. | | | | Consolidated loans usually allow you to have some |
| They begin paying them six months after graduation | | | | flexibility in your payment structure, meaning you can |
| and don't stop until 10, 20, or even 30 years later. By | | | | adjust the loan term to be shorter or longer. |
| the time they're finished, they've paid double what | | | | Adjusting the term will also adjust your monthly |
| they originally borrowed. It's unfortunate but for | | | | payment adversely. For instance, if you make the |
| many people it's the only way. | | | | length of the loan longer, your monthly payments will |
| Luckily, there is a way you can reduce the total | | | | shrink. This may seem like you're saving money, |
| amount of money you pay for your student loans. | | | | however you are paying more interest on a longer |
| You won't be able to lower the amount you owe, | | | | term which means in the end it will end up costing |
| but by consolidating your loans you can benefit from | | | | you more. |
| some cost saving incentives. | | | | On the flip side of that, if you restructure your |
| For instance, when you graduate you usually have | | | | payments so you're paying more each month, you'll |
| many small loans from a few different lenders, each | | | | pay off your loan sooner and pay less in long-term |
| of them at their own interest rate. By consolidating | | | | interest. Nearly all consolidated loans have no |
| you combine all those loans into one large loan | | | | prepayment penalties either, so you should make |
| through one lender. When you do this, your interest | | | | sure your lender won't penalize you for paying your |
| rate is averaged out, and fixed at a rate lower than | | | | loans back early. |
| some of your previous loans. It might not seem like a | | | | An indirect way that consolidating your loans can |
| big deal, but over the life of your loan, you'll save | | | | save you money has to do with where you apply |
| thousands. | | | | your funds. If you've consolidated and restructured |
| When you consolidate your debt with a single lender | | | | your loans to the point where you have a very low |
| they stand to make more from your loan, which | | | | interest rate, along with low monthly payments, you |
| means they have the room to offer you discounts | | | | can potentially invest the extra money and earn a |
| and incentives. They do this mostly to set | | | | percentage point or two or three above your loan's |
| themselves apart from competing lenders, but in the | | | | interest rate. It may only start off as a few extra |
| meantime you benefit with reduced interest rates, | | | | dollars a month, but again, over time those pennies |
| flexible payment plans, and good standing incentives | | | | add up. |
| that will lower your interest even further. | | | | |