Keeping
track of all your student loans can be confusing - is
consolidation of the answer?
Whatever
type of loan you take out, it comes with its own interest rate. It may seem a
mystery when it comes to keeping track of your loans and payments.
When it
comes to loans,
consolidation is a great option. By consolidating your loans, you may be easier to handle,
because in essence, your multiple loans are one and the payment will
be simplified into one monthly payment.
Before you
decide to consolidate your loans, but financial experts point
out that there are some factors that you should be sure to think about.
Consider
the following factors, as listed by US News & World Report before deciding
whether loan consolidation is a good idea for you:
What kind
of loans
Believe it
or not, you have something more than your balance to consider what types of loans you have taken
out.
For
example, if you took the same or different types can make a difference in the
consolidation.
If you're
like most borrowers who have taken a mix of both loans and unsubsidized Stafford.
You will need to consult with your lender to find the tariffs for each loan
rates and whether the loans have fixed. If you are unsure
of your loan, which is what sends your monthly statements.
Assuming
you decide to consolidate your loans, remember that a consolidated
payment is an average of all your loans are consolidated.
What you
need to consider then is whether the average consolidation will make more
interest paid on time. The combination of lower interest rates and higher can
get you to do it.
Your loan
benefits
Again, note
their types of loans
and benefits each offers.
For
example, some types of loans offer more loan forgiveness
options or other flexible payment. Combine them with other types of loans can reduce or
eliminate these benefits and opportunities.
Conversely,
consolidation help you access these settings forgiveness.
The savings are not guaranteed
While
consolidation can help confusion by changing several loans into one, which should not be
the only reason you decide to consolidate. If you are able to hold your
payments on track, consolidation is probably unnecessary.
If you have
trouble just keeping track of your payments separate loans do not consider automatic
debit payments as an alternative to consolidation.
But if you
are struggling to make payments, you will likely see a reduction in the
consolidation. It is likely to end up paying more in the long run, but worth it
if you have been delinquent in their payments.
Consider
both short term and long term goals
Decisions
on loan consolidation should take into account the long term as well as the
present. This is because their payment situation is likely to improve as time
goes on, especially if your wage as your career progresses.
If this is
not the case, and your wages are expected to main stagnant instead grow
significantly in the long term, it is important to consider that too.
If you are
currently struggling to repay their loans and may well default on their
payments or grow close to making it, loan consolidation is a great option for
you.