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4 Important Facts About Student Loan Consolidation
By Marc Lindsay
When getting loans you should always understand what youíre getting yourself into before you sign up. So here are 4 important facts you should know about consolidating student loans.

Fact 1: Same Interest Rates For Everyone At The Start
All federal student loan consolidation rates must start with the same rates that are suggested by Congress every year. Student loan consolidation companies are required to give everyone the same federal rates

Fact 2: You Save Money On The Benefits
If itís your first time consolidating your loan then the real savings are in the benefits and discounts of signing up.

Standard benefit: 0.25% off your rate for using automatic checking account withdrawal.
Standard benefit: 0.6% off your repayment rate if you consolidate in your grace period.
Extra benefit: if you have more than $20,000 in federal student loans, 1.0% off after your first 36 on time payments.

Ok letís start with a scenario, of $25,000 in federal Stafford loans and your rate before 1 July 2006 is at 3.37%. If youíre still in your grace period (6 months before your payments start only for graduates) youíre rate will decrease to 2.875%.

Automatic checking account withdrawal will reduce is further to 2.625% and after your 36th on time payments your rates will drop a further 1.0% to a new low of 1.625%. This is how the benefits of student loan consolidation really works and it really saves you a lot of money.

Fact 3: Read The Fine Print Before You Sign Anything!
Some loan companies will give you a list of borrowerís benefits for signing up with them. For example if you make 24 on time payments youíll get 1% off which is great but in the fine print itís only available for loans above $50,000. Statistically, only 17% of all graduates will have a loan debt this high so itís not advised to sign up with this particular company.

Other companies give even better benefits like 2.5% off your rate but theyíll only give you a grace period of 3 days. Thatís not going to work because what happens if your mail got delayed or worse you didnít check your mail? It means that youíll loose your benefits so be careful and always read the fine print.

Fact 4: Good Customer Service Is Important
Some student loan companies will do anything to make you call them but when


you do you find yourself lost because some companies donít train their phone staff well and they fail to answer simple questions. So when ringing up loan companies make sure they are well versed in their products and they know their products and rates. Also make sure that when you wait on the phone for a consultant, that you donít wait too long like 1 hour because it could mean they are under staff or they are taking on too many applications at one time which means they might not always be able to take your call after youíve sign up.

I hope these facts will help you in your decision and may you have a successful time finding the best student loan consolidation company.


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This page was updated on Nov 2009 and is Copyright © 2003 by Global Com Consulting Inc.