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Because the majority of student
loans are variable rate loans, they are subject to constant
fluctuation depending on the current interest rates set by the
government. With today's college student loan consolidation rates,
you can lock in a low fixed interest rate. Because the rate is fixed
after consolidating college loans, there are never any surprises
when the first bill arrives after the yearly rate adjustment.
For many years, student loan
rates remained at record lows. On July 1st 2006, rates increased
significantly as a result of a government plan to reduce the federal
deficit, but those who didn't refinance by July 1st 2006 can still
save a lot of money each month by consolidating college loans. After
consolidating student loans, the balance can be repaid over a longer
period of time, reducing monthly payments by as much as 60%.
You can receive
additional interest rate reductions through college debt
consolidation
When consolidating student loans,
you not only enjoy a fixed interest rate but you can also earn
additional interest rate reductions offered by the lender that
consolidates your college loans. Different lenders offer different
types and amounts of incentive plans, and by knowing what to look
for, you can save yourself a great deal of money above and beyond
the already low consolidation rate.
ScholarPoint offers is customers
a full 1.5% interest rate reduction, one of the most competitive
savings incentive offers in the industry. The majority of incentives
are offered to customers for making on-time payments and for having
payments directly debited from their account - something most people
do anyway!
Improve your
credit score by consolidating college loans
Many students take out numerous
loans throughout their college years. A student that takes out just
one subsidized and one unsubsidized student loan every semester will
accumulate 16 different loans on their credit report over the course
of four years. While numerous loans are a benefit when it comes to
paying for college, they can really drag down a credit score after
college.
When consolidating education
loans, all of these open loans are closed and replaced with one
simple loan for the entire balance. After consolidating college
loans, you will also have a much lower monthly payment, thus
reducing your debt to income ratio.
Reduce debt to
income ratio by refinancing college loans
Refinancing student loans can
shave as much as 52% off of your monthly payment by extending the
repayment period. This can make a huge difference in your cash flow
each month. When creditors consider whether or not to lend you
money, they will consider your debt to income ratio, which is the
amount of income coming in compared with the amount paid toward
bills each month.
A typical student with a $300 per
month student loan payment can save as much as $200 per month by
consolidating student loans. This savings can certainly make the
difference between securing a loan for a car or other necessities. A
favorable debt to income ratio can also help you to secure lower
interest rates on new lines of credit which can literally save you
thousands of dollars over a lifetime.
Reduce dependence
on high interest debts by consolidating student loans
Many young professionals just out
of college turn to high interest credit cards to help them get
through the period where expenses are high and their careers are
just ramping up. The average college student carries 6 credit cards
with a combined balance of around $2100. These high interest credit
card debts can really put a strain on your finances and limit your
capacity for getting 'good' credit.
By consolidating student loans,
borrowers can free up several hundred dollars in disposable income
and reduce dependence on high interest credit cards. The savings can
be used to pay off high interest credit card debts accrued during
college. Paying off just $200 per month above the minimum could more
than pay off the average college student's credit card balance in
just one year.
College loan consolidation is
simple and extremely fast now thanks to the internet. By
consolidating student loans today, you could save yourself several
hundred dollars by the time you make your next loan payment.
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