About Student Loan Consolidation

Submitted by poorteacher on Tue, 09/16/2008 - 22:23

Transferring credit balances to the wrong lower interest loan is tantamount to accepting a life preserver from a shark. Similarly, choosing the wrong consolidation loan savagely threatens the point of consolidating at all."
The article, however, goes on to say that if you know what you are doing, consolidating can offer one more option that can lower your payment by combining loans. Most consolidation lenders, however, will not consolidate less than $7500 total in student loans.
The repayment period of most of these loans is usually 12-30 years and can be a fixed monthly payment or graduated over time. Obviously the longer the extended repayment period, the more costly the loan. The obvious solution to consolidation loan is to accelerate the payoff as soon as possible and not drag out the loan for the full period. As can be seen in the reference article, the interest saved can often be in the thousands of dollars.
Collegiate Funding Service (CFS) at www.cfsloans.com offers the following sound advice:
"... experts caution that not all student loan consolidation products are alike. By doing some research and asking a few questions, borrowers can save themselves significant headaches, time, hassle, and money." Some of the questions CFS suggests you ask of a potential lender include:

• Does the lender offer an interest rate reduction for on-time payment?

• Will your lender tailor your repayment plan to meet your financial needs should you want to pay off the loan more quickly?

• Are you able to get instant information on whether you qualify or if your loan’s been approved? Can your loan be processed over the Internet? What kind of turnaround time can you expect?

• Are your customer service calls immediately answered by a live human being?

• Does the lender offer a range of plans to meet your specific income and financial needs?

CFS argues and I fully agree that picking a student loan consolidator without research is like buying a used car without test-driving it, or purchasing a house without an inspection. DO YOUR HOMEWORK FIRST!