You may want to consider student loan consolidation. This option can be a good one if you have a large amount of student loans. Since student loan rates vary you may consider doing this is to lock in the lower interest rates that are available. It is important to consider your options carefully before you make a choice.
When you consolidate your loans you are locking in your interest rate. This is good if the interest rates continue to rise, but if the interest rates drop you have locked in the higher rate, and you will not be able to change it. You can only consolidate your loans once, so you will not be able to change the interest rate.
Student loan consolidation often lowers the monthly payment because it extends the repayment period. Most student loans are to be repaid in ten years. If you consolidate you may extend that period up to thirty years depending on the amount of your loan. While the payments may be easier to manage, you may end up paying more in interest, then you would if you did not consolidate.
Only certain types of student loans are eligible for consolidation. Most loans through the government are eligible, while most private loans are not. You can learn more about the specific loan types here.
If you do decide to consolidate your loans, so that you lock in the lower interest, you should plan on repaying the loan as quickly as you can. This will save you money in interest payments. You can still qualify for deferment and forbearance on student loans if you meet the requirements.
While you are considering student loan consolidation you may want to check to see if you can lower your interest rates by setting up an automatic draft from your account. You may want to ask how they apply the extra payments made to your loan. If they pay the interest first, you may want to pay extra on the due date of the loan, so that more money will be applied directly to your principle. You may be able to do principle only payments instead.
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