Considering Student Debt Consolidation?
You’re about to learn a lot of valuable information about student debt consolidation that, if acted upon, could put a lot of money back in your pockets after college. Let’s get right down to debunking the standard campfire myths!
Myth: Consolidation of student debt is just too complicated to invest time in!
Fact: While it may seem complicated or time-consuming, the process of student loan consolidation is rather simple and the rewards are quite bountiful. In fact, the process has been made easier than ever by student loan companies who will do all the work for you. They will walk you through the entire process and even help you pick out a lower repayment plan based upon your eligibility. Student debt consolidation can transform your loans into one, simple, manageable, lower repayment plan that can make paying back your student debts easier than you can imagine.
Myth: If I have a single lender, I have been told I can not consolidate.
Fact: No longer true! In June 2006, the single lender rule was repealed by Congress and President Bush. That effort was a catalyst in overturning the single lender law! As a result, you now have the freedom of choice to consolidate your student loans with anyone you choose, regardless of who your original lender is.
Make sure you choose a company that has your best interests at heart all the time.
Myth: If I consolidate my student debt, I must extend the terms of my loan.
Fact: Not true. You can, indeed, maintain the exact same terms and monthly repayment amount as your original student loans. (This is a good idea, since you may be able to pay off your consolidated loan even faster!)
Myth: As long as I’m in school, I cannot consolidate any of my Federal student debtuntil I graduate or leave school.
Fact: Not entirely true. If you are in graduate school, you can consolidate your undergraduate school loans. Also, if you’re in a post-graduate program, such as medical school or law school, you can consolidate your undergraduate and graduate school loans to get the ball rolling before interests start accruing.
Myth: Even if I have a high-interest rate but I’ve already consolidated before, I can’t consolidate my student loans again to take advantage of a lower fixed rate.
Fact: Not true. You can reconsolidate if you either; received a new eligible loan since the consolidation or have left an eligible loan out of the original consolidation.
Myth: Student Debt Consolidation will hurt my credit rating.
Fact: Not true. If anything, Federal student loan consolidation may help your credit rating. Especially if your goal is obtaining additional credit for a mortgage or a new car!
When you apply for any form of credit, such as a mortgage loan or credit card, lenders will evaluate your credit score as part of the application process. Your credit score takes into account the number of creditors you have as well as the balance of outstanding loans. By consolidating your student loans into a single loan, you can effectively decrease the number of creditors on your credit history, thereby enhancing your overall credit score.
You’ll be happy to know that at most student loan companies, there are no credit checks!
Myth: The word consolidation is frowned upon in the credit industry.
Fact: Not true. There are two types of consolidations in the credit world. One is consumer debt consolidation and the other is a Federal student debt consolidation. Each is very different from the other. Consumer debt consolidation is usually meant for people who have had trouble paying off their bills and can really hurt their relationships with their creditors.
Student loan consolidation, on the other hand, doesn’t hurt anything. No relationships are harmed because, by consolidating all your Federal student loans, lenders will be paid in full and one single new loan (a consolidated loan) will be issued in its place. In fact, your credit rating may actually improve after you consolidate!
If there is one good thing that the Government has given the American students, It’s the option of student loan consolidation. Every student should consider consolidation after graduation and determine their eligibility for the Federal loan forgiveness programs.