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How Do Student Loan Consolidation Rates Affect to Your Payments?

Because the influence can be that big, it is crucial to learn more about the student loan consolidation rates and to think, what makes them to go up or down. Actually the student loan consolidation is a great time to try to get lower rates and ease the monthly payments.1. The Federal Loan Consolidation.How are the student loan consolidation rates calculated for the federal loans? The formula is very simple. The rate is the weighted average of the present loans. When you have this one, it is the time to compare that with the market prices and to think, whether you could save something in the monthly payments.The Stafford loans interest rates use a fixed rate of 6.8 % through 2013. However, if the Stafford loan was disbursed before July 1 2006, it has a variable interest rate, but will get the fixed rate, if it will be consolidated. The present interest rates for the federal student loans are historically low. Stafford loan in school or grace period is 1.88 %, Stafford loan in repayment is 2.48 % and Federal Plus is 3.28 %.2. Consolidate The Variable Federal Loan.If you have a federal loan with the variable rate, now is the right time to get the new student loan consolidation rates. The reason is simple. Because the market rates are so low, you can get the low rate for the rest of the loan running time. This means rates for Stafford loan in school or grace period of 2.0 %, for Stafford loan in repayment 2.5 % and for Federal Plus 3.8 %. That can mean real savings for many years.3. Why The Consolidation Brings Savings?Usually a student has taken several loans to finance the studies, when his or her credit score has been the lowest possible. When he has graduated and maybe got the work, the credit score has improved and the interest rates may have decreased. By consolidating, which means one private and one federal loan, he will negotiate the loan with the new payment time and the new interest rate level. These are the two factors with which he can adjust the monthly payment.4. The Meaning Of The Interest Rate.The interest is the price of the debt, which a borrower will pay to the lender. The interest levels are set by the markets and the economy has a great influence on them. The lower is the rate, the better to the borrower, especially if the payment time is long.

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