Tips For College Loans – Rates For Consolidation

While in college, most students do not have time to give much thought to how they are going to one day pay for their student loans. Instead, they are busy studying, figuring out which major to choose, getting a date, or going out and having fun.Reality hits pretty hard on about 2-3 months after graduation, however. Soon, the grade period granted for most types of student loans is set to expire. The new college grad is now focusing on how to earn a living and build on his or her personal life. Then, the harsh reality of college loan repayment hits.The actual payment amounts that the student is responsible for making is determined by the loan’s interest rate and agreed-upon repayment period (which is often 5-15 years).Meanwhile, the complexity of the repayment process is directly affected by one other thing: if the student has taken out multiple student loans. Having multiple loans means that some payments are due on the 1st, some on the 20th, etc. This is a pain to manage.The Benefits Of College Loan ConsolidationIf you are a grad who holds multiple college loans, you may be interested in consolidating your loans. Consolidating your loans comes with a number of benefits. The biggest benefit for most people is the ability to stretch out your repayment period over more time, such as going from 10 to 20 (or even 30) years.Another benefit is that of simplifying one’s life. By consolidating, you only have to make a single payment each month and only have to deal with one lender.College Loan Rates For Consolidation: How They Are CalculatedThe interest rate for federal consolidated loans is calculated as a weighted average of the interest rates of your existing loans, rounded up to the nearest 0.125% (with a maximum rate of 8.25%).Meanwhile, the interest rate for private consolidated loans is calculated based upon some standard rate (like the prime rate) and your credit score. The rate you are offered will vary from lender to lender, so it pays to shop around.Tips For Getting The Best RateFor private student loan consolidation, the interest rate of your new loan could vary quite a bit. Here are some tips for getting yourself the best college loans rates for consolidation:1. Check your credit score: Before contacting a private lender, research your credit score. For better or worse, your credit score will play a huge part in the rate you are offered (see above). Therefore, knowing your score ahead of time gives you the power of knowledge to help influence your negotiation.2. Calculate your idea repayment period: Find an online loan calculator. Based upon the total amount you still owe on your existing college loans and your current (weighted) average interest rate, plug in different repayment periods (e.g., 10 years, 20 years, etc.) and see how they affect your payment amount. Caution: while lower monthly payments may be just what you need right now, remember that a longer repayment period will result in your loan costing you more in the long run.3. Research rates with multiple lenders: Compile a list of at least 5-10 private college loan lenders. You can research them online. Write down the important information about each one, such as advertised rates, contact information, etc.4. Apply to at least 5 lenders: Be sure to apply to at least 5 of the best lenders. You will be tempted to stop once you get your first offer, but following through and applying with all of them will greatly increase your chances of getting the best-possible offer.Follow these tips to get the best interest rate for your loan consolidation.