A college or graduate school education is a thing of pride for a life time. Being a Graduate means you can be confident that you have a solid foundation in a depth of learning that can launch a career and inspire an intellectual life.
For many graduates however, besides the pride of college graduation comes the heavy burden of student loan debt. It is not uncommon for them to be indebted to the tune of one hundred thousand dollars for years and years after graduation.
The usual trend is that after graduation, employed college graduates may make enough money to make their monthly loan payment but as time passes and new demands like buying a house and raising a family start to get piled onto the graduate, managing student loan payments can become too challenging.
This challenge making monthly student loan payments can be particularly difficult for those with multiple student loans. Having more than one student loan means making payments to different lenders on different days of the month. This is inconvenient.
Consolidate If You Can Get a Good Rate
A good solution is for graduates in this situation to consolidate all the loans into one's student loan. Via a private loan consolidation, you will have just one loan. This means a single interest rate and single payment each month. It also means being able to spread your payments out over up to 30 years, which may well lower your monthly loan payments.
Consolidating your student loans is a good idea if you get a better rate than that of the average rate of your current loans.
How to Calculate Student Loan Consolidation Interest Rates
For those with private student loans, you may want to consolidate through a private consolidation lender. In doing this, your new rate will be calculated based upon a combination of the current prime rate or other standard rate index and an additional margin determined by your credit (FICO) score.
5 Tips For Getting The Best Rate
If you decide to consolidate your loans, then it will be wise to do everything you can to qualify for the best rate. Below are 5 tips for doing so:
1. Have your credit report run with all three Big Three credit bureaus - Your new rate will be determined in part by your credit score, so start the consolidation process by running your credit report with TransUnion, Experian, and Equifax.
2. Calculate your current weighted average interest rate on your current loans - Calculate the weighted average of the interest rate of your existing loans. The result of your calculation is the rate you want to your new interest rate to beat.
3. Do a research on loan consolidation lenders: Go online to research and create a list of at least 10 lenders that specialize in student loan consolidation. While you may want to limit yourself to just find one or two, remember that your chances for getting the best-possible deal rise significantly if you are dealing with multiple lenders.
4. Keep a research log: While comparing lenders, keep meticulous notes in Excel or with pen & paper, including lender name, contact name, contact phone, published rates, and credibility of website.
5. Apply to about 5 lenders: Now start applying for your student loan. Remember, apply to a minimum of 5 of the best lenders you researched.
Finally, getting the right student loan consolidation interest rate is about knowing the rate you want to beat, how to carry out your research, and how to pick best right offer. Doing so could lower your monthly payments at least $100.
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