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| Loan Consolidation |  In most cases, consolidating student loans is an ideal option for lowering monthly payments and compatible, predicable monthly payments. The largest benefit of consolidating student loans is locking in a fixed interest rate and getting freedom from the government’s changeable interest rates. But you should keep in mind that not every student loan is perfectly suited for consolidation. Each various type of student loan has different qualities that should be weighed when consideration whether to include them when consolidating student loans.
The Stafford Loan – Ideal for consolidation
Stafford loans are ideal for student loan consolidation and the most popular type of loan. The Stafford loan is a changeable interest rate loan, meaning that every July 1st when the government implements the new rate changes, the amount of your Stafford loan payment will change. The payments continue to fluctuate for as long as payments are due, no matter how long ago the loan was written.
Consolidating student loans with variable interest rates can lower payments up to 63% through a combination of a low fixed interest and an extended repayment period. Stafford loans propose forgiveness programs for those in certain professions, particularly teachers. If you want to receive consolidating student loans, you need to verify that you won’t lose this benefit if you’re eligible. Before consolidating student loans, check to see if your profession or volunteer group makes you eligible for student loan forgiveness.
The Perkins Loan – Consider the current interest rate before consolidating
Unlike the Stafford Loan, the Perkins Loan is a fixed rate loan and not subject to rate fluctuations. The interest rates determine the interest rate on your Perkins loan at the time the loan is issued. Consolidating student loans with the Perkins loan included is a good option if today’s interest rates are lower than the interest rate of the loan.
But if the interest rate today is higher than it was at the time your loan was issued, you will pay more over the course of the repayment period to include the Perkins when consolidating student loans. For some borrowers, the advantage of one low monthly payment is more important than saving a few dollars over the course of 10 years.
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