Clearing the Clutter with Student Loan Consolidation

Chances are you took out more than one student loan while attending your college or university. So, twice a month, more often maybe, your mailbox is probably cluttered with payment reminders. Dealing with two payments or more, at different times of the month, makes budgeting a nightmare.

 On top of the multiple payments, you're probably being charged at different interest rates. And to complicate things even more, some of those rates may be variable, some of those rates may be fixed.
Goals of Student Loan Consolidation

 After school is over and the real world figures in, you'll need to do two things to simplify your life and your budget:

 Goal One - You need to pare down your budget by having only one payment, one that you can afford.

 Goal Two - You need to get a fixed-rate, low-interest loan; those variable rates have got to go.

 Student Loan Consolidation Facts

 Student loan consolidation is the answer to reducing the clutter in your mailbox, in your budget, and in your mind. Consolidation of your various loans is not a big problem. Certainly not compared to the monthly angst you are experiencing now.
 Consolidation consists of a single institution giving you enough money to pay off all of your lenders. You will then have just one payment a month at a fixed percentage rate over the duration of the loan. The payments will be in an amount that's reasonable regarding your ability to pay. You can get a lower monthly payment by stretching out the time for repayment. Lenders will work with you on this.

 Shopping for a Student Loan Consolidation

 When you go shopping - yes, shopping - you are going to be on the lookout for the best situation you can find, from a lender who is offering fixed rates. A simple, three-step process is required.

 One: Get some figures for your comparison shopping. For these, you need to figure out your weighted average interest rate. Say you have three loans at interest rates of 5, 3, and 2.5 percent. Now, determine what percentage amount remains unpaid on each of the loans. Say you still owe at the percentages of 20, 30, and 50 percent, respectively. The equation to figure your weighted average interest will look something like this: (20% x 5%) + (30% x 3%) + (50% x 2.5%) = weighted average interest rate.

 Two: Figure out a repayment time period, and its resultant monthly payment, at an interest rate you can live with. This is best done with a loan calculator; you can find one on the Web. What you want to do is plug in your outstanding balance (that is the total number of dollars you owe on all your loans). Plug in interest rates that you can bear, and plug in repayment periods: 20, 25, or 30 years. You will be able to see how one affects the other and that will help you set some goals for your shopping.

 Three: Take the time to hunt down and correspond with five - yes, at least five - lenders. You are cheating yourself if you go for less. Be sure that the numbers you use are the same across each loan application to make your comparison shopping easier.

 Student Loan Consolidation Offers Peace Of Mind

 Having followed the steps above, compare the various lenders and go with the one that is best for you and your situation. As you can see, it is not that onerous a task to wrestle your school loans into a manageable, consolidated form. With all that clutter cleared, a little of peace of mind, and more than a little piece of your monthly earnings, will be yours again.

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