The new graduate should not overlook student loan consolidation programs. As you begin your job search or your new job, you will only have six months before you must begin repayments. Though that sounds like a long time away, you would be surprised at how soon the time flies by. If you are like many students, you probably have more than one student loan through various companies. When you do start loan payments, paying hundreds to two different companies can be expensive. Imagine having to do this for 10 to 25 more years.
Consolidation programs cannot make the payments go away, but they can help you by reducing your monthly payments. Through these programs, your loans are combined under one lender. You can secure very low interest rates and your payments could be reduced by 50-60 percent. Most programs also offer better repayment programs than do loan companies. And unlike the loan programs themselves, you do not need to a co-signer to sign up or have a credit check. No matter what your financial situation, consolidation programs will help you get your loans paid off as soon as possible.
Now that you know what advantages these programs have, here is a list of what to look for in student loan consolidation programs:
- Make sure the consolidation program will cover the type of loan you have. Some consolidators do not cover Federal PLUS loans or alternative loans. Check the policies for more information.
- Along with covering the right loans, make sure you have enough loan debt to qualify. The eligible amount does vary from company to company. If you have loans that total between $7,000 - $10,000 or more, you will be able to find student loan consolidation programs.
- Look for loan consolidation programs that offer incentives for consolidating during your grace period (the six month period after you graduate from college). Your payments could be reduced by another 1 percent if you consolidate early. Programs will also reduce payments for automatic debit payments or for making a certain number of consecutive payments on time.
- The right programs will not charge fees, prepayment penalties, or any other charges for using their service. If you run across a program that does, do not sign up with them. They could be trying to take your money.
Remember that you qualify for student loan consolidation programs after you are no longer enrolled in school as a half- or full-time student. You will not be able to consolidate your loans before that time. Most loan programs will not make you start paying until you are no longer a student so you will not have to worry about repaying your loans before then anyway.
Most consolidation programs do not want you to be enrolled in any other consolidation programs either. So, once you select a program, make sure it is the best one for your particular loan programs. You will not be able to consolidate your loans if you are in default, meaning you are behind more than 270 days behind on your payments.
Even with all of the tips given in this article, always double check the legitimacy of any loan consolidation programs you are considering. Make sure they are intended to help you, not just take your money.
By Tamara C. Jude