by Ryan Foley

Created on: October 18, 2008

The point of interest for an accredited four-year university for prospective students is to one day enter the working world with accolades that show their inititative and determination. The downside is that the majority of these graduates are faced with a various loans which need to be paid back eventually. Many do not consolidate loans because that eliminates the grace period of time alotted before having to pay back. Here are some points you should consider before throwing out the option of loan consolidation.

First off, do you qualify for loan consolidation? Yes. Through legality issues, lenders must provide the option of loan consolidation upon request. The good thing is, this option is still valid even if you are in default through federal or private lenders.

Secondly, what does loan consolidation do for you? An individual can select to consolidate the entirety or partial loan based on how they sit fit. If you are exercising the option of consolidation, I would opt to consolidate the entire loan. We'll talk more on this later. Pros and cons exist in every situation so we'll analyze both. What loan consolidation does in a nutshell is extends the repayment period and in turn creats more interest over the longer duration of that repayment period. However, if you choose to consolidate during the grace period, (the alotted time given before repayment is due) usually interest rates are cut in half and remain at a fixed rate. The plus about the extended repayment period is the monthly payments drastically increase.

Loans made before July 1st, 2006, had a variable rate. Since that time period, loans have been locked into a fixed rate with the rate increasing annually. However, if it is fixed a loan consolidation does little to counteract any lower interest rate (unless in grace period as aforementioned).

So what are the positive attributes of consolidating? Well as aforementioned it is better to lump your entire loan than to do it partially. Why is this? First off, it creates one monthly payment instead of having to stress out about eight different incremental payments from all of the loans you have accrued. For any who took loans out prior to 2006, this is a very beneficial option. Since rates before then were variable, this will lock you into a fixed rate which guarantees you at that rate for the duration of the repayment period. If you need to extend the repayment period for any reason, consolidation can also help. There are a variety of repayment options made

• 1
• 2
• Next Page >>