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There are other viable options that can be used as an
alternative. Information about these options is available with the
financial-aid office. Hence, it is important for students to consult
a financial counselor before considering a student consolidation
loan.
Refinancing during grace period:
Federal loans such as Stafford loans provide students with a
six-month grace period. This grace can be availed even after the
student has graduated from the school. Loan repayment starts only
after the grace period has ended. This is the right time to
consolidate a student loan as the interest rates during the grace
period are far less than the rates after the expiry of the grace
period. Once the student is employed, interest rates are determined
based on the income.
Lender Initiatives:
So as to sustain in the market and be competitive, several financial
organizations and private lending firms offer a variety of packages
and promotional offers so as to attract customers. Some of these
include reduced interest rates, flexible repayment options,
reduction on on-time payments and auto debit option. Since, there
are several lending firms providing consolidated student loans, it
is better to shop around so as to get the best deal.
Another useful strategy is to opt for a variable interest loan
during the initial years. Once the interest rate decreases to a
considerable level, the variable interest rate loan can be switched
to a fixed interest rate loan. Federal and private student loans
should never be combined while opting for a consolidated loan. Under
certain exceptional situations, students with Perkins loans are not
required to pay back their loan amount if they work for a prescribed
number of hours in professions such as teaching or community
service.
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