After graduating from college, you may have the opportunity to consolidate your student loans, in case you are eligible for it. The option is available only once, hence it should be handled carefully. This thing should be kept in mind that consolidating your student loans with your spouse student loans is not a good option at all. In case of your death, your estate is not responsible for the student loans that you took but if you consolidate them with your spouse, the person will have to pay them back. This benefit can only be availed for the federal student loans.
The process is not difficult and even if you spend just two hours for it, you can gain the benefits. Given below are the instructions on how to draw benefit out of this scheme:
- You need to be sure of your qualifying for student loan consolidation. You should have finished school and should not be currently enrolled in any such program. You also need to figure out which loans qualify. There is no opportunity to consolidate your subsidized and unsubsidized Stafford loans. Before applying for the loan consolidation, you should compile all your loan papers and billing statements to make sure you do not forget one of the amounts because each year is considered a new loan.
- After figuring out that you are eligible for loan consolidation, you should carefully choose the lending firm to be opted. Many companies offer further discounts for automatic draft payments or offer a lower interest rate after a certain number of timely payments. You are required to carefully go through the terms regarding each student’s loan consolidation application.
- You also need to understand that consolidation decreases your monthly payment but you end up paying more in interest on the loan. This process generally takes a ten year loan and spreads it across a time span of 20-30 years.
- Depending on your financial institution, terms and conditions may vary. Before you fill the application form, be sure that you have all of your student loan information available with you.
- Another important thing to notice is the deadline. The student loan rate increases on July 1 every year. If you file before this time, you will lock in a lower interest rate and save yourself money. You should put across your requirement and explain him what exactly you wish, enabling him to help you out with the best available option.
- Once the consolidated student loan comes through, you should duly check the paperwork. Mistakes in the paperwork have been found common even to the extent of applying wrong interest rate. Such mistakes occur more often, especially in cases that are applied for consolidation during the grace period. You should make sure that you are locked in the interest rate that you applied for. This rate does not depend on your credit score, as would be the case with a private student loan, because it is set by the federal government.