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Best Time to Consolidate Student Loans

Attending college is a vital part of becoming successful in today’s society. The work force is extremely competitive and in order to remain in the game, people need to obtain a degree. Graduating from high school is no longer considered enough, and around 75% of high school graduates will attend college. The cost of attending college or a university isn’t cheap, and students need to find sources of financial aid to reach their educational goals. Student loans like private student loans and government student loans are a necessity for students who don’t have a ton of money lying around for college.

Most college graduates are in debt to student loans. In fact, most college graduates will have multiple student loans they will be required to make payments on. Paying on multiple student loans can end up being a financial hardship on the graduate, unless they consolidate their student loans. The best time to consolidate student loans depends on a number of issues. First off, students should consider current interest rates that are being offered on student loans. If interest rates are considered low, students should consolidate their student loans with a personal loan or other means of refinancing the loans.

The main goal of the graduate when consolidating student loans is to obtain a new loan at a fixed rate that will pay off all other student loans. Students who have federal student loans like Stafford loans are advised to keep an eye on the interest rate of federal student loans. If the interest rates fall on federal student loans, the graduate should then refinance their federal student loans in order to obtain the new interest rate. Graduates will also have the opportunity to consolidate their private student loans with federal student consolidation loans as well.

Another factor to consider is when the student graduates. One of the best times to consolidate student loans is immediately after the student graduates. All students have a grace period on their student loans. The grace period is the time when the student graduates until the time the student is required to start making payments on their student loans. The grace period is typically 6 months after a student graduates. Students will have the option to consolidate their student loans for the lowest rate possible if they consolidate their student loans during the grace period. One other factor to consider is the deferment program that federal student loans provide.

The deferment program is a program that allows the student not to pay on their student loans when unemployed or when attending school. Students who consolidate their student loans with federal consolidation loans will be eligible for the deferment program if they are unemployed or attending school. However, if the graduate or student chooses to consolidate their student loans with a personal loan, they will not be receiving any type of deferment program. No deferment program is something to consider when consolidating student loans with personal loans, even if a personal loan is providing the lowest interest rate possible.

Students and graduates that consolidate their student loans during times of low interest should also focus on getting a fixed rate on the loan. Variable rate consolidation loans will be a bad choice when interest rates rise. In fact, many graduates will find themselves in financial hardship if interest rates go up on their student loan. Another factor to consider is that the lowest rates on student loans are generally found in federal student loan consolidation programs. In other words, private loans and personal loans used for student loan consolidation will typically have a higher interest rate on the loan. The best time to consolidate student loans is when the student is able to obtain a lower interest rate.

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