By the time you finish college, it is more than likely that you will have several loans. Four or more years of loan debt can leave you with several repayments to different loan agencies. In most situations, you are required to apply for a new loan each year and depending on your financial status, you might qualify for loans with different interest rates. Consolidating your loans into one loan can help save you time and money.
If you decide to consolidate your school loans, there are several different consolidation programs. You will first want to look at what type of loans you received. If you borrowed from the government, you will qualify for different consolidation programs than if you borrowed from a private lender. You will want to review your options. It’s possible that you received both private and government loans. It is still possible to consolidate your loans, even if this is the case.
If you plan to consolidate, there are a few different consolidation programs. Which one you choose may depend a little on what type of loan you received. There are different consolidation programs for private loans vs. government loans so be sure to look into your options based on the types of loans you have.
There are typically four refinancing options to choose from when you decide to consolidate loans. Option number one is called the standard repayment plan. With this program, you make monthly payments on a fixed interest rate. Repayment schedules will range anywhere from ten to thirty years. Option number two is called the extended repayment plan. With this program, your payments are less than with the standard repayment plan and the payment schedule is between twelve and thirty years. This repayment plan varies depending on how much you have borrowed.
The third option is the graduated repayment plan where your monthly payments increase every two years. Under this plan your repayment period varies from twelve to thirty years, depending on the total loan amount that is borrowed. And the fourth option is the income contingent repayment plan where your repayment plan is based on your annual income, family size, and total amount of loan debt. Under this plan your payments are spread over twenty five years.
Finally, there is the option of the income contingent repayment plan. This is an excellent option for people with low income and or large families since the repayment is based on your total debt, annual income, and family size. Your repayment schedule will span over twenty-five years. Whichever student loan consolidation program you decide is best for you, it will most likely help improve your financial situation.
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