Student Loan Consolidation
You would think comparing student loans would be easy. After all, the government sets the interest rates and fees lenders can charge, right? This is assuming you are looking at federal
Think again. To compete with each other, lenders offer an incredibly confusing variety of incentives such as fee waivers, discounts and other promotional benefits. One of the most common incentives, for example, is a reduction in the interest rate or the loan principal after you enroll in an automatic debit program or once you make a number of on-time monthly payments, typically 24 or more. Some lenders offer application fee waivers on the front end, others offer rewards on the back end, such as waiving your last six payments or wiping out your balance once you pay it down to $500.
Which benefits are best? The ones you get upfront. Those are savings that you get immediately and cannot lose, he explains. If a lender waives the application fee on your Federal
Contrast this with benefits that kick in once you enter repayment or after some number of on-time monthly payments: You may never see any of those savings because once you graduate; you will likely consolidate your loans. That is because student loan consolidations have their own incentives, different from those offered on
Logically, if you are shopping for a student loan consolidation discounts for on-time payments do matter. However, do keep in mind that less than 25% of students make enough on-time payments to qualify for such reductions.
One thing to watch for is some lenders might make you repay any upfront benefits you have received if you consolidate your loan with a different lender. Be sure to read the fine print.
Consolidating, or refinancing, student loans occurs when outstanding student loans (even just one) are bundled into a new student loan with one monthly payment. Federal student loans and private student loans must be consolidated separately.
You can save time and money by comparing multiple federal student loan consolidation options from a variety of leading lenders. Simply enter the amount of your outstanding federal student loans and a little bit about yourself to see a customized list of school loan consolidation options. You can also compare the total cost of repaying the balance if you do not consolidate versus the consolidation options.
When considering student loan consolidation, some of the things you want to consider are the annual percentage rate (APR). This takes into account principal, interest rate and structure, fees and other costs of the loan, and length of repayment. The total cost of the loan. This is an estimate of the sum of the total payments you would be scheduled to make on a loan. The Monthly Payment, and finally the loan’s borrower rewards. This can also be called borrower benefits or loan discounts. Many lenders offer these incentives to encourage borrowers to repay the loans in a responsible way. Borrower rewards also provide lenders with competitive advantages over their competitors. Some borrower rewards are applied automatically, meaning that you receive the benefit just for getting the loan.
