When a student will graduate, he or she usually has one big problem to solve, the debts. He may have heard, that if he will consolidate debts, it will make the management easier and also he has a chance to get better terms.
1. The Better Circumstances To Consolidate Debts.
A typical student is not a wealthy person, who has an excellent credit score and thus a chance to get cheap loans from the bank. The studying debts have been taken in a circumstance, when a student has no income nor any guarantee, that he will get one in the near future. But what will happen with the debt consolidation?
The grace period is the time to consolidate debts. That is the period after graduation, when the student loans consolidation has to be made, because after that it will be more expensive. The fortunate thing is, that many graduates have got the job and thus better credit scores.
2. What Do The Better Credit Score Mean?
To put it simply, it means cheaper debts, for instance. The interest is the price, which a graduate has to pay to get money from the bank. The bank sets the borrowers into a different order according to the risk, which they attach to them. If a borrower has a good track record and high credit score, he is a low risk customer to the bank, which means lower interest rate.
3. Is It Wise To Get A Longer Payment Time?
The temptation is big, if a graduate will get both the lower interest rate and the longer payment time, because they will decrease the monthly payments with hundreds of dollars. However, the general recommendation is, that a graduate would pay the loan back as soon as possible, because the longer he will pay, the more interests he will pay.
4. You Cannot Consolidate Federal Debts With The Private Debts.
So, what you can do is to consolidate debts inside the federal and private groups. This rule comes from the fact, that the federal loans have benefits, which come from the tax payers and they are not allowed to mix with the private loans.
5. How Much Is The Maximum For The Debts Consolidation?
When you want to consolidate federal debts, you have a possibility to include any Direct Loans and FFEL up to the remaining balance of these loans. After the loan consolidation, these loans will be paid away and you start to pay your new loan following the agreed schedule.
The private loan consolidation follows the agreement between the borrower and the lender, so I cannot give any general terms.