The Pros and Cons Bay State Village Student Loan Debt Consolidation
If you have variable rate student loans, don't wait another day to consolidate your loans. Consolidating now could save you money and simplify your life. To find out if Bay State Village student loan debt consolidation is appropriate for you, compare the pros and cons described below. Get a Free Student Loan Consolidation Quote from Bills.com when you're ready to consolidate.
Why Bay State Village Student Loan Debt Consolidation is Beneficial
Student loans issued between July 1, 1998 and June 30, 2006 have variable interest rates, therefore consolidation has the most advantages for people with those loans. Although the interest rate can't go higher than 8.25% when it resets annually, it can get near that rate if you don't consolidate while the rate is lower.
If you have several loans with varying due dates and similar account numbers, your lender may apply your payment to the wrong loan or you could miss a payment without realizing it. By consolidating into more manageable loans, you can avoid the worry of missing a payment or having it misapplied.
Most lenders offer additional discounts of .25 to .5% off the interest rate if you set-up automatic payments, with an additional 1-2% discount, depending on your loan balance, after 24-36 months of on-time payments. If your loan term is extended to twenty years through consolidation, 1.25% off your rate could save you a lot of money. Interest is still tax deductible for consolidated student loans, so you don't lose the interest rate deduction unless you exceed the income cap.
Reasons against Bay State Village Student Loan Debt Consolidation
If your loans are close to being paid off, then consolidating doesn't make sense. Any savings you receive from automatic discounts wouldn't be large enough to offset the additional interest you pay by extending your term.
You should only consolidate if you can keep your student loans separate from other loans. Although you could save extra money by rolling your loans into your home loan, you also put your home at risk. Student loans are forgiven at your death, but other loans are not, so your heirs could be stuck with your student loans if they're combined into any other kind of loan. You should avoid consolidating your student loans with your spouse's loans for the same reason. A consolidation lender can't forgive only a part of the loan.
Terms and conditions
An individual qualifies for the consolidation of his loan if he no longer is enrolled in a school. The student must also be in the grace period for the loan or should be paying it off actively. There are some companies that consolidate loans where an individual has defaulted on a higher interest rate. An individual can look for lenders online for financial aid once it has been determined that he or she qualifies for the consolidation of debt. The lender should be chosen keeping in mind that the interest rate offered should be affordable. Large payments can be made in the case of federal loans owing to the fact that there is no penalty for pre payments. The interest rate in such cases is still low.
In case of private loans which are taken outside the federal loan, both these loans should be consolidated separately for if they are consolidated together, the individual stands the risk of losing the benefits of the federal loans like the interest which is tax deductible amongst other things.
Florence, MA (01062)
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