Getting the Best Student Loan Consolidation
More than likely you’re going to be dealing with your student loans for the next 10 to 20 years, so you want to make sure you get absolutely the best student loan consolidation plan possible. Unlike other types of debt, almost everyone consolidates their student loans, and it’s really profitable for lenders. Those factors add up to the reality that you’re going to get a good deal if you just know what you want and what to look for.
Step A1 before you even talk to any consolidation companies is to decide what your priorities are when it comes to consolidating and paying off your student loans. You might not have realized this before, but depending on your priorities you can either go for a really low interest rate via your consolidation, or you can go for an actual reduction in the principle you owe.
So how does that work? If your goal is to pay your loans off over a longer period (like 15 to 20 years) then it’s probably wiser to go the traditional route and just go for the lowest possible interest rate.
On the other hand, you might be one of those high achieving people who landed a sweet six-figure salary out of school and you’re looking to pay off your loan as fast as possible. If that’s the case you can actually ask for a reduction in balance as part of the consolidation process. The lender will be willing to lower your principle amount because a) they’re going to keep you at a higher rate, and b) they’re going to get their money from you more quickly because your repayment period will be shorter.
Either situation can be a win-win for you and the lender, you just need to go in with a good understanding of your priorities.
One note of caution: whether you take the lower interest rate or the lower principle amount you want to make sure those benefits are completely permanent! You don’t want to get five years into your repayment plan and then have them stick you with an inflated rate!
Here are a few of the benefits that will come with any student loan consolidation program (because they’re guaranteed by law):
- No penalties at all if you’re wise enough to pay your loans off early.
- No credit check whatsoever (talk about a bonus!).
- No upfront fees (good luck finding that with any other kind of loan consolidation – yeah right).
- Unchanging interest rates. Once you’re locked in, you’re locked in.
- An automatic reduction in your interest rate of .6% if you consolidate within your six month grace period after leaving school.
One benefit you should really look for with your student loan consolidation plan is a discount given when you set your monthly payments up on automatic withdrawal. It’s good for the bank because they don’t have to chase you for payments. And it’s good for you because you make your payment on time, every time, without having to think about it!