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Should you consolidate student loan bills?

Copyright 2005 Debt Management Credit Counseling Corp.

By Pete Glocker Category: 0

Submit your Articles Here!

Copyright 2005 Debt Management Credit Counseling Corp.

Make the right choice on grace periods, length of loans and
consolidation.

Let?s see here, you just graduated college and got hired at
your first job. It is now a month before holidays and (two,
three or four) different loan companies send you statements
in the mail informing you that you have to start paying on
your student loans next month. You must be thinking, it is
the holiday season and I have to buy gifts and pay my
bills. How am I going to afford to start paying off my
student loans? Here is how.

Grace Periods

Many recent college graduates choose the option to defer
their loans for six months. That is how long the grace
period is for student loans. It may be a good idea to take
advantage of this option if it took you a while to find a
job or if you are starting out on a low salary. Most
entry-level positions do not offer the highest salaries.
However, if you do have a decent salary job or if your loan
is not tremendously high, it may be smart to start paying
right away because the faster you can pay off your student
loan, the easier it would be for you to buy a house and
save money for the future. Remember, you will have to
eventually have to pay back your student loan, so the
longer you prolong paying, the more time it will take you
to pay it off and the more it will cost you in added
interest charges.

Length of Loans

Student loan repayments are usually scheduled over ten
years. Lenders can have the option to have floating
interest rates on loans, but cannot exceed 8.25 percent due
to Federal Government laws. So obviously, the shorter the
length of the loan; lenders have less of an opportunity to
change your interest rates. Many lenders give you the
option of extending your repayment length. Students with
$60,000 or more in student loans may opt to extend their
payment period up to thirty years. Basically, it is common
since; the shorter the payment period of the less money you
will spend on interest.

Consolidation

If you have three or more different lenders like most
students with the government issued Stafford Loans, it is
definitely in your best interest to consolidate them into
one. The reason being, you can have one loan with a locked
low interest rate. Most consolidated loans have an interest
rate of five percent or less. So instead of paying three
different payments with different higher interest rates, it
is best to have one lower fixed rate.

Remember, student loans are a financial obligation that
will affect your credit history and influence your credit
score .Be responsible, pay them off in a reasonable amount
of time, pay them off sooner and you could save thousands
of dollars in interest. The dollars you save could be the
down payment on your first home.


----------------------------------------------------
Pete Glocker is employed in the Education and Charitable
Services Department at Debt Management Credit Counseling
Corp. (?DMCC?), a 501c(3) non-profit charitable
organization located in Boca Raton, Florida. Pete graduated
from Florida Atlantic University with a BA in Multimedia
Journalism and is an experienced web producer for Tribune
Interactive products Sun-Sentinel.com and SouthFlorida.com.
DMCC provides free financial education, personal budget
counseling, and debt management plans to consumers across
the United States. Debt management plans offered by DMCC
help consumers relieve the stress of excessive debt by
reducing credit card interest rates, consolidating and
lowering monthly payments, and stopping collection calls
and late fees. DMCC financial counselors can be reached for
free education materials, budget counseling and debt
management plan quotes by calling 800-863-9011 or by
visiting http://www.dmcccorp.org . Pete Glocker can be
reached by email at pete@dmcccorp.org.


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