Should I consolidate my student loans?
Q: I wanted to know if it is better to make payments to my current student loan of $200 per month at a 6.8% interest rate or if I should continue to pay on my past loans at 3.25%.
Thanks for your help!
A: Students who are making payments on their student loans face the challenge of having multiple interest rates to juggle. This is a common situation where you consolidated your undergraduate loans at a lower interest rate and took out new student loans at the current interest rate.
The current interest rate on Stafford loans is 6.8% fixed. In comparison, when you separate from school again, you can be making payments on multiple interest rates.
The best thing for a student would be to take all your student loan payments and combine them into one new consolidated student loan; this will result in a lower monthly payment, lower than what you had been paying keeping them separate.
The most common reason graduates choose to go this route is to lock in a new loan with a much lower interest rate, which in turn creates more cash flow for you each month and more cash on hand for other expenses.
Adam Hoffman
Quality Control Specialist
OneSimpleLoan
Copyright ©2008, Young Money Media, LLC
Stumble It!
Digg
Facebook
DeliciousComments
does it take longer to pay off?
Money Saving Tools
- P2P LoansNeed a loan, don't use a bank!
- ScholarshipsA collection of easy to enter scholarships
Related Articles
