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The Benefits of School Loan Consolidation

Debt consolidation is easy to understand and can be very helpful in managing debt. In commercial loans, you can take multiple credit card debts and money that you owe for payday loans and roll it all up into one debt consolidation loan to help you have one lower payment to handle. Similarly, you can roll numerous private school loans into a larger consolidation school loan to send out just one lower payment, making it easier to handle the debt. However, you can not roll together federal student loans and private loans into the same debt consolidation loan.

Changing the Repayment Term

You may be wondering how lumping everything together is going to reduce your monthly payment. The lender that offers a consolidation loan offers a longer repayment term. This does extend the amount of time you will spend repaying the loan, but it also makes it easier to handle the monthly payments. Typically, the maximum repayment terms is 25 years for undergraduates and 30 years for graduate students.

Reviewing the Interest Rate

At the time of the consolidation, your credit rating will reviewed and if you have better credit than when you first took out the loans, you could see a rate drop. This can also help to lower your monthly payment. Another way to get the lender to lower your rate is to have a co-signor with excellent credit sign with you on the new debt consolidation loan.

Deferments Available

There is also the possibility that you may qualify for a deferment if you are in an residency or internship. Another case where deferment may be an option is when you go into active duty for the military. You can get up to a four year deferment, or five if you are going into the military. Before you take out a debt consolidation loan, be sure to check if there are options for deferment that you can take advantage of in the future.

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