Consolidating student loans

College tuition costs are higher than inflation and as a result so has student debt. The Project on Student Debt reports that two thirds of students graduating from a four year institutions have debt averaging $ 19,200 [source:Singletary]. With the amount of money invested for the future, that student loans offer,however most starting salaries for graduates are not up to the rise in debt[source:The Project on Student Debt].

Any new graduate always needs money, and lowered monthly payments, through debt consolidation would help. Luckily, restrictions cap interest rates for former students who want to combine their federal student loans through the Direct Consolidation Loan government program. The maximum interest rate for a federal Direct Consolidation Loan is 8.25%.

Under a federal consolidation loan, and you have a private student loan and a federal loan, these loans cannot be rolled together. It’s also not a good idea to combine them under a private loan because most likley your intrest rates will rise [source:Fin Aid].In addition, you would miss out on important perks that could come in handy for your federal loans including advantages repayment, forgiveness and cancellation opportunities [source:FinAid].Also in having a federal student loan the interest you pay is tax deductible.

For whatever reason, you still want to consolidate your loans, you can with any institution not just the one where the loan was originated.If you shop around you’ll see the companies that offer lower interest rates than the federally instituted maximum. In reading the fine print, some companies state that payments must be paid on time or if you don’t adhere to the agreement your interest rate will increase.When considering how long your loan is for it undoubtly will be harder to accomplish.

Unless your credit report score is above the 500s a bank or credit card company will not be able to offer a good deal on any loan, look out for finance companies that only look after themselves and that is not in your best interest.Note that some alumni associations have been accomplices in loan consolidation companies.In exchange for payments, some associations have been providing alumni lists to Nelnet, a company that specializes in education loans [source:Paley].To learn more about scams involving debt management, and the possibility of hidden fees could put you more in debt , read the article below.