Federal Student Loan Consolidation – Reviewing the Benefits
Lower your Payments and Lock in your Interest Rate
To determine if consolidating your federal student loans will be helpful, you have to look at some of the benefits of consolidation. If your goal is to reduce your payments each month, then consolidation is a worthwhile undertaking. Plus, a student loan consolidation will lock in your interest rate.
Raise your Credit Score and Make Budget Planning Easier
Therefore, you know exactly what you will be paying each month as well, making it easier for you to plan your budget. Not only that, a consolidation will immediately raise your credit rating. Pay off several loans at once and take out one loan and you will definitely see your credit score soar. Plus, a student loan consolidation offers a number of repayment options, which, again, will make it easier to incorporate the payments in your monthly financial plan.
More Choices with Respect to Repayment
If you choose a Stafford student loan consolidation, you can obtain a consolidated loan, given the current economic climate, at a lower interest rate – good news if you want to stretch the payments out for a longer length of time. Plus, with this type of loan you are not penalized for early repayment so you can double up on your monthly payments if you so choose. If you select a Federal Stafford loan consolidation, expect the loan process to take about a month or two months versus the typical three or four months it takes to consolidate these kinds of loans.
Requirements for Funding
Borrowers should possess a balance of at least $20,000 to qualify for a Federally-funded Stafford loan consolidation. To consolidate the loans, you do not need to be currently employed or secure the loan with any kind of collateral. The fixed interest rate on the loan amount will be based on the weighted average of all the APRs of your current loans. Keep in mind that it is best to consolidate your loans during the grace period as that is when interest rates are usually reduced.
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