Students, consolidate your loans now and save extra money NOW!
By Daniel at 13 July, 2009, 8:20 pm
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Timing couldn’t been better. Consolidation rates for federal student loans with variable interest rates — Stafford and PLUS loans originated before July 1, 2006 — are now at the lowest levels in their history.
“With private student loan consolidation, you may be able to lower your monthly payments and qualify for a reduced interest rate, but here’s some other basic information you should know.*
What is private student loan consolidation?
Private student loan consolidation can combine all of your eligible private student loans together into a single loan and may reduce your monthly payments. This credit-based loan has attractive interest rates and repayment terms, which may help you keep some extra money in your pocket every month. Federal student loans are not eligible for this program.” - Chase Student Loan
“Student-loan consolidation wraps a borrower’s federal education loans into one new fixed-rate loan. Since the rates dropped on July 1, borrowers with Stafford Loans who consolidate during their grace period can lock in a rate of 2%; Stafford borrowers who consolidate once their loans are in repayment can secure a rate of 2.5%. Meanwhile, PLUS loans, which are originated by the parents of undergraduate students, can be locked at 3.38%.
When locked in, those lower rates can potentially save thousands of dollars in interest over the span of a loan’s repayment, Kantrowitz said.
For example, a $20,000 Stafford loan on a standard 10-year repayment with a 6.8% interest rate would require a monthly payment of $230, and the total interest paid over the life of the loan would be $7,619, he said.
But if a borrower locked in the interest rate of 2%, payments on the loan would be $184 a month, and total interest paid would be $2,083 over the same 10 years. The lock-in at 2% would mean a 20% lower monthly payment and an overall savings of $5,536 in interest, Kantrowitz said. ” said Nate Becker.
How can consolidation help me manage my debt?
Student loan consolidation offers you many benefits to help manage your education-related debt. Here are a few of them:
* A single monthly loan payment on one bill
* Competitive interest rates
* No penalties for prepayment, so you can repay your loan early at any time
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