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There is no better time than now to consolidate student loans. Consolidating or refinancing student loans can easily save borrowers up to 52% on their current loan payments, so most people are eager to consolidate as soon as possible.
Many students take out subsidized and non-subsidized Stafford loans each year of college—a total of 8 different loans, all accruing interest at a variable rate, and all showing up on credit reports as open and unpaid lines of credit. Are. Many students also take out additional loans during their college years such as Perkins loans and various industry specific loans, further enhancing the benefits of a single low interest loan payment.
By consolidating your loans, you will have one fixed rate loan to pay off all other unpaid variable interest rate loans. A consolidated loan has a longer repayment term, which means lower monthly payments. For those fresh out of college and starting a career, lower student loan payments provide a safe way to improve cash flow and reduce reliance on credit cards.
Unlike regular student loans, there is no time limit for consolidation, although consolidating during certain times of the year can result in greater savings. For those planning ahead, the best time to consolidate is during the post graduation grace period of six months. Refinancing student loans during this grace period means locking in interest rates that are 0.6% lower than those available after the grace period ends.
The loan consolidation process can take several months so it is important to start the application process soon after graduation. Don’t worry about sacrificing your grace period by applying early. You can enter the end date of your grace period for federal loan consolidation so the loan doesn’t start until that date.
The most important times to refinance are usually when you need to increase cash flow and reduce or restructure your monthly bills. Making high student loan payments and only having enough saved to pay the minimum balance on high interest credit cards doesn’t make financial sense. Through consolidation, the average $350 monthly loan payment can be reduced to approximately $165, freeing up an additional $185 per month to pay off higher interest loans.
If possible, save money and make yourself completely free from debt. $185 per month saved over the course of 5 years adds up to $11,000 to use to buy a vehicle outright, start a business, or make a down payment on a home. Although the loan amount is longer, leveraging your payments so that you pay less when your career is young can give you the cash flow you need to start your life off right.
Any time is a good time to refinance student loans. Low fixed interest rates and long repayment terms are a winning combination for those looking for a better way to manage their monthly budget.
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