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Paying Off Student Loans
While student loans may be the last thing on the mind of many graduates, the six months following their graduation — also known as the grace period — is actually the best time for students to consolidate and begin repaying their loans. During the grace period, student loan interest rates are more than half-a-percent lower than when the grace period ends. So, consolidating at this time allows students to maintain that lower rate until the loan is paid off. However, the choice of whether to consolidate is an individual one, and comes with benefits and disadvantages. For more information about whether student loan consolidation is right for you visit www.stopthedeception.org
Some benefits of consolidation include:
- One lender, one loan, one payment.
- Lower monthly payments. A consolidation loan extends the repayment term based on total, outstanding balance, thus decreasing payments by as much as 60 percent.
- One, fixed interest rate based on a weighted average of the loans included for the life of the loan.
- Choice of repayment plans. Borrowers can choose standard, graduated or income-sensitive repayment plans.
Some disadvantages of consolidation include:
- Increased interest costs. Extending the repayment term results in more interest being paid throughout the life of the loan.
- Loss of some types of deferments.
- It takes longer to pay back. Depending on the starting balance, it can take as long as 30 years to pay off a consolidation loan.