3 Things Need to Know for Student Loan Consolidation

When the student loan interest rates rise, many students were asked to consolidate student loans. This article discusses the three things you need to know before consolidating:

Consolidating your loans to lock in lower interest rates

Consolidate student loans before interest rates increase will help you to block into lower interest rates. This rate is fixed for the duration of the loan. The lower interest rate can save you thousands of dollars in interest over your repayment period.

The consolidation requires you to waive your pay period after graduation
On unconsolidated student loans, the government pays interest on your loans for six months after graduation. This means you will not be liable for a payment during this period. However, consolidating your student loans will lose this grace period. You will be responsible for payments on your loans immediately after graduation. Students who are considering consolidation must first determine their ability to begin repaying their loans until they are able to find a job.


Interest rates may drop out before graduation

Recently, interest rates have been rising steadily. However, they can not keep doing it. If you consolidate, you are stuck at the prevailing rate for the duration of the loan. If no consolidation, the interest rate fluctuates with economic conditions. It is possible that interest rates fall below the current rate in the future. However, if consolidation now will lock in the rate in effect regardless of the status of the economy. The maximum interest rate that can be imposed on student loans is 8.5%.