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| The Right Time for Consolidation |
 July 1st changes cut several consolidation benefits
If you are still in school, or are married and want to consolidate student loans with your spouse, or want to refinance a previously consolidated student loan, it was better to consolidate by June 30th, 2006. Part of the new federal laws will either remove or reduce advantages in all of these situations. Since July 1st the opportunity to consolidate student loans for those in school or who are married is no longer an option. Those who would like to consolidate student loans a second time will be limited in their options.
If you’ve missed either of these windows, you’ll still save money on your monthly payments
The advantage when you consolidate student loans is that you can use time and a fixed interest rate to enjoy a much lower monthly payment. When you consolidate student loans, all of the outstanding loans are paid off and replaced with one fixed rate loan and a repayment period as long as 30 years. This combination of factors can reduce a monthly student loan payment by more than 60%.
Make larger monthly cash flow when you need it most
Most people directly out of school and just beginning careers need the advantage of a low monthly payment. When you consolidate student loans, you can easily make better your monthly cash flow by reducing your student loan payment. When your level of income grows, you can make bigger payments to cut down on the years of repayment without any additional penalties.
Reduce open loans before applying for major credit purchases
Another good time to consolidate student loans is before applying for credit on major purchases like a home or car. A student who takes out just one subsidized and one unsubsidized student loan every semester will graduate from college with 16 open loans on their credit report. All of these open loans can negatively influence your credit rating, making you to pay larger interest on new lines of credit. By consolidating student loans, you will close all of these open loans and replace them with a single, fixed interest rate loan.
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