Out of college and facing a mountain of federal student loan debt can be very stressful while you are struggling to establish yourself in the real world. Subsidized, unsubsidized, Federal Direct student loans, Perkins loans…all these loan payments. Who can keep up with them? If this is you, you may want to seek a federal student loan consolidation.
When you consolidate, your new lender buys back all those smaller loans and combines them into one lump sum, giving you only one payment. Much easier to keep up with. In addition, it should lower your payment and your interest rate. Many companies offer reduce interest for direct debit payments. Consolidation will also extend your repayment time. It improves your credit score since one large loan looks better than a lot of little ones.
When consolidating, ensure that your new payment is smaller than the combined total payments of the loans you are consolidating. Look for the most flexible terms in regards to early repayment, forbearance and deferment. Do not go with a variable APR. Variable APR causes your payment amount to fluctuate making it harder to manage your money. Also, your $180 payment could balloon to a $220 payment virtually overnight.
Many companies are now offering online applications for consolidation making it easier for the busy graduate to apply for a federal student loan consolidation.