In September we currently have situations where some college graduates may be nearing the beginning of their student loan repayment period while other graduates are already working to combat their student loans, but as information has shown that student loan debt has become one of the major financial problems and obligations that many Americans have, it stands to reason that numerous graduates are looking for ways to pay off their loans at a more affordable cost, which may sometimes require consolidation. However, the decision to consolidate must be a choice that a graduate makes after careful consideration, and there are obvious benefits to comparing student loan consolidation costs by looking at what rates may be available on both federal and private consolidation plans.
In some cases, a consolidation loan that comes with an affordable rate may lower a graduate’s repayment obligation on a monthly basis, which could potentially help avoid missed payments in the future, but this does not mean that every graduate will be able to take advantage of these student loan consolidation plans. However, certain aspects of student loan consolidation programs, coupled with interest rates that are available on these types of loans, can better help provide information to former students when it comes to making a decision as to how they will repay the debts.
Since there are many graduates who have multiple student loans, it should first be understood that calculating the total costs related to repaying the loans, when interest is factored in, should be a graduate’s first step as this will give them a base from where they can begin the comparison process. It’s at this point that many have looked at private and federal loans, due to the fact that they can both offer different rates, repayment programs, or potential affordability. Currently, most rates on private student loan consolidation programs may fall anywhere between 4% to 13%, with variable rates usually coming in at the lower end of the spectrum and fixed rates at the higher end.
It should be kept in mind though, these rates are only averages and it will depend on a student’s financial position, credit rating, and the types of loans they may be consolidating as to what rate they will ultimately receive. Yet, most of federal student loan consolidation plans will offer rates that may average between 4% to 8%, but students who have a mixture of private and federal loans will not be able to consolidate any private student loans into a federal consolidation plan, so this needs to be kept in mind as well.
Ultimately, in order for a graduate to better figure out what their overall costs will be, they must look at their personal student loan debt situation, what rates they will be given if they consolidate, and there are many bank websites and federal websites that offer consolidation loan calculators that can help students in this area, but looking at the overall repayment costs, monthly payments, and how these plans will fit into a graduate’s current financial position can go a long way in the decision-making process of whether certain consumers can benefit from a student loan consolidation plan and if the rates they receive will help them avoid missed payments in the future.