How Does a Student Loan Debt Consolidation Work?

For students who need help in paying for their costly education, students loans are a great help indeed. The problem is most students have huge debts when they leave and finish college. Not only that, they tend to have more than 1 loan from various lenders, summing up to a more large debt they will have to pay. So how can one solve this problem? With a student loan debt consolidation of course!Loan consolidation is an effective way to bundle all your student-loans into 1 with only 1 lender and 1 repayment option plan. With it, your existing student loan balances will be paid off and the total balance will be made into just one consolidated loan, making it less stressful.When you consolidate your loans, your loan will be locked into just one fixed lower interest rate and that of course means, saving you thousands of hard-earned dollars. Not only is it pretty much convenient as it combines all your loan payments into just one monthly bill but it also significantly lowers your monthly bills.Not only that, your consolidated loans will have repayment options that are flexible with no charges or even prepayment penalties. And you don’t even need co-signers or have your credit checked when you consolidate your student loans.A student loan debt consolidation works best if the consolidated loan would offer a lower interest rate compared to your current student loans especially if you have problems paying monthly. But if you’re almost done paying off your student loans then consolidation would not be the best option for you.For you to be able to consolidate your student-loans, you should have eligible student-loans that would total over $7,500; you have not consolidated your loans yet or you may have gone back to school since you last consolidated; you don’t have any new loans; you have more than 1 lender; and you are already in your 6-month grace period or you are starting to pay your student-loan debts.Now, in order for you to know your consolidated loan’s interest rate, calculate by getting the average of the interest rates of all your loans that are to be consolidated and then round them up to the next 1/8 of 1%. 8.25% is the maximum interest rate. However, the interest rate will just be the same for all lenders but some offer discounts for keeping monthly payments debited from your account directly and some even go with a future rate discount when payments are done promptly.One good tip for you to get a lower interest rate is to consolidate your loans while you’re on your grace period.So if you have decided to go through loan consolidation, just keep in mind that you can only do it once unless you decide to go back to school and acquire new student-loans. Because of this, it is highly-recommended to think twice and get the best deal so as to never have any regrets.