When you need to consolidate student loans, what you should do!
It’s a typical story. You begin your freshman year of college, much closer to high school graduation than college graduation and you take out a student loan that doesn’t need to be paid back until six months after college graduation. It’s so easy to do and the payments are so far away. Fast forward four years and you’ve got several payments totaling more than $400 bucks a month staring you in the face, and $30,000 in debt to pay off.
Having more than one student loan is a problem many graduating seniors have. Consolidating student loans can be a way to reduce your monthly bills and give yourself a little financial breathing room. There are some things you need to know, before undertaking a student loans consolidation, though. Federal loans cannot be consolidated with private ones. Beginning in July 2006, all federal student loan consolidation began carrying fixed interest rates. Prior to July 2006, rates were variable and often students could lock in a rate that was lower than what they were paying on each loan by itself.
A new repayment plan for federal student loans began this year and it's designed to help those entering fields with low starting salaries. The monthly payments are capped at a certain percentage of the student’s income. If an individual who is single and childless with a starting income, an adjusted gross of $40,000, the payments would be $365. When your income goes up, so does your payment. If the direct student loan consolidation is still not repaid after 25 years, it is forgiven.
The need to consolidate student loans is often a pressing one for graduating seniors. Like a term paper, do your research before diving in.
