Student Loan Consolidation Interest Rate.
Consolidating your student loans can get you a lower interest rate, or a higher one, with a longer repayment period. Let’s review what you should be on the look out for and whether you should consolidate your student loans. Obviously you want to repay them, but this is a big decision, not to be taken lightly. There are many pitfalls along the way. You could ruin your financial future if you make the wrong decision. Let’s make sure that you get an interest rate, repayment schedule, and monthly payment that you can live with!
What is the Student Loan Consolidation Interest Rate?
The interest rate on student consolidation loans is capped at 8.25%. The interest rate would be the weighted average of the student loans being consolidated, rounded up to the nearest eighth of a percent. This insures that you get approximately the same rates that you had. If someone tells you that they are giving you a lower interest rate, beware. Make sure that they show you the weighted average math that they used to prove it to you! It could very well be lower than the highest interest rate, but when averaged out you could actually end up with a higher interest rate!
Who Can Consolidate and When?
Parents are also allowed to consolidate. They can not however consolidate together with the students. They would have to be separate.
Students that are married have to consolidate independently of each other. If a divorce occurs each is responsible for their own debt.
Students can only consolidate loans during the grace period or if the loans are in the repayment process.
Loans can not be consolidated if the student is still in school.
Parents can consolidate PLUS loans any time.
Consolidate Student Loans With Any Lender.
You may consolidate your student loans with any lender, allowing you to take advantage of lower rates, discounts, and terms. Banks differ in terms and some may have minimums and maximums. You will be the one making the decision. Make sure that yo know how to make the right one.
Lowest Interest Rates.
When comparing loans, terms and rates make sure that you factor in all discounts. Your credit score has probably improved making you eligible for a lower rate. You may also get a lower rate for making your payments on time and making them automatically out of your bank account.
Final Thoughts.
In today’s economic climate the interest rates are falling. Banks want to lend you money. This would be a good time to consolidate your student loans. Just make sure that you do all of the math. Make sure that you don’t end up paying more than you would have if you did not consolidate. Make sure that you can live with the terms. Your credit rating is one of the most important things in your life. Make sure that you do your homework with any decision that can affect it!