Student Loan Consolidation Basics

If you are attending college and have taken out student loans, then you may be thinking about repayment. The good news is that repayment does not have to be difficult. There are many options and a great deal of flexibility involved with the repayment process. If you have more than one loan, then student loan consolidation is for you.

Loan consolidation is essentially the process of taking multiple loans from different providers and paying that loan with a single umbrella loan from a single provider. There are significant benefits when you take this approach. The result is a lower payment amount and simple repayment process.

With loan consolidation you use a single lender. The best part of the repayment process is that you only have one monthly payment to take care of. Consolidated loans also have a number of payments options to choose from. Research your options and decide which option works best for you.

Repayment options include standard repayment where you make a fixed sum payment for up to ten years. If the monthly amount is too much for your budget, you can extend your payment for a longer time period of up to 30 years. The third option, which is relatively new to loan consolidation lenders is the graduated repayment schedule.

When selecting a graduated repayment option you make your payments over an extended time period. The only difference is that your monthly payments will not remain the same throughout the life of the loan. This graduated payment schedule is good for those who need the lowest repayment amount early in their repayment schedule.

Consider that once a loan is consolidated your interest rate is fixed even though graduated repayment requires a change in this rate every two years. This means that you must make an equal payment each month. This is important when you are repaying a consolidated loan or any loan for that matter. Not repaying your loan in a timely manner can result in default, hurting your credit rating and ability to borrow.

A great way to make your payments is by deciding on the right repayment option to meet your need. One popular method is to set up a direct withdrawal from your account every month. This automatic process simplifies your payment and ensures that you never miss a payment. The sooner you set up the automatic repayment process the easier it will be to make your monthly payments.

When you start to repay your student loans, explore student loan consolidation. Loan consolidation makes the repayment process easier and gives you a number flexible repayment options. Think about a budget that allows you to make your payments in an automated fashion. Lastly, work with a legitimate lender who can work with you and your life situations during the repayment process.