So you are just out of college and have the chance to get the C-suite job but you need to know if you should take that discussion up any further with the student loan consolidation lender. They have sent you all the forms since they have a list of all the graduates and are offering lots of perks and you thing the a student loan might be the best thing for you, but be cautious.
Here are some reason why you might not want to consolidate federal student loan:
New Loans: If you have a new federal student loan, where the interest is stable, you will not see any significant change in payment if you were to consolidate this loan. Federal student loan consolidation program allows the lender to bundle all your existing federal student loans into one payment. Newer loans, with fixed rates can actually see the rates drive up if consolidated with the other older loans and you will not see a reduction in you payment since lenders round off all payments to the nearest 1/8 of a percent to the average student loan you owe.
Pay more: When you apply to a federal student loan consolidation, you are asking the lender to roll all your existing student loans into one bill, this new loan is called a consolidation student loan. It is spread over a longer period than your previous loan and the terms are different. This cause you to pay more over the length of time, this can be from 10-30 years.
Separate: Private student and federal student loans cannot be combined. This is never possible as they have different guidelines that covers each loan program. Federal student loans are offered by the US Department of Education, a government agency and this makes it easier for many people with bad credit, no credit or bankruptcy history able to get loans, it is a need base most of the time. While few are non-need base. However, private student loans have different criteria and serves many times as a gap to make tuition possible. When you are thinking of debt consolidation, you cannot merge the two into one. They must be treated separate.
Getting Stuck: In 2011, when interest are low, you should not consolidate your federal student loans, since you only can consolidate them once, you can get stuck with higher interest rates if you were to opt to federal student loan debt consolidation. The same is true if the interest rates are high and you opt for no consolidation. Consolidate federal student loan with the best interest rates since they cannot be reverse.
Interest: With the federal student loan debt consolidation, they are very clear advantages and disadvantages you can incur. With the Perkins loan, when you opt for federal student loan consolidation program, you loose loan forgiveness provisions, all subsidize interest and also you loose 9 months of grace period. On the other hand with the Stafford Loan, you retain the interest benefits if you opt for consolidation.
Federal student loan consolidation might sound easy but have several hidden clauses you might never see, while there are no prepayment fees or upfront fees they are certainly ways in which you might benefit from a federal student loan debt consolidation program. For safety, take your time, analyze all options and use the best judgment when considering federal student loan consolidation.