How to Lower Your College Student Loan Debt
How does College Student Loan Consolidation Work?
What does college student loan consolidation do for you? Instead of paying multiple lenders each month, you pay less money per month and make only one payment to one lender. Of course, this means your repayment period will be longer and you will pay more than if you could pay off your loans in full now. If, like most recent graduates, you cannot pay off your loans in full, consolidating your college student loan debt may be the best way to go.
Do you qualify to consolidate your college student loan debt?
There is a set criteria for student loan consolidation – your debt amount has to exceed $10,000, you have to be out of school, and it’s best if you consolidate your student loan debt within 6 months of graduation. You will also need to not have defaulted on your college student loans previously.
Consolidation Loan Application Deadlines
The thing to keep in mind when you are looking to consolidate your student loans is that the new interest rates are applicable after July 1st, so June 30th is your deadline. You have to do your research, complete your paperwork and get things underway before that.
Choosing a Consolidation Loan Lender
You do have choices. It is up to you to decide which lender you want to work with. Ask for references from your school’s financial department. Make sure a potential consolidation loan lender knows you are shopping around when you negotiate with them. Find out any discounts and deals you can get out of the package and make sure they are in writing. Also be sure to research both private and non-profit student loan consolidation companies and organizations.
Consolidation Loan Application Paperwork
Your paperwork is of the utmost importance. The new lender will want to know all about you; your loans, their types, the school your went to and information about your employer. They will also require personal references. Make sure you have all of the information ready.
Most private consolidation loan companies have an online presence along with their regular offices as do federal student loan and non-profit student loan consolidation organizations. The important thing to remember while completing your loan application is that you should never forget to recheck for accuracy. Everything entered will be scrutinized and it would do your loan application no good to try to get away with over-reporting income.
Once you have applied, the lender will probably contact you within 24 hours. If you do not hear from them in a timely manner, there is nothing wrong with contacting them to ensure there is nothing wrong with your application. Don’t forget that you are giving them business and they know they are competing for that, so it is in their own best interest to respond to you in a timely manner. Once approved, your lender will contact you to award your new loan and to define the schedule of repayment.
Final College Student Loan Consolidation Tips
- Make sure you do not consolidate Federal student loans along with private ones. Consolidate your Federal college student loan debt first and your private loans later.
- Do not delay. Get your application at least "substantially complete" before 30th June.
- There will be those that offer discounts for direct debit from your bank, making it an automatic monthly payment. Never give your creditor access to your back account.
- Don’t just sign; always read the fine print on any loan contract before you agree to anything legally binding.
- Never fall for the lowest rates with a 20 year repayment period. You may end up paying longer and paying more. Do you really want to still be paying off your own college student loan debt when your kids are in college?