Student Loan Dodgers

If you’re approaching graduation and you have student loans from several different semesters, consider student loan consolidation, if you can still find lenders offering consolidation on student loans. For federal student loans, there’s no better way to save money than to consolidate your college loans. When you consolidate a student loan, all of your smaller student loan amounts are combined into one larger consolidated loan, often with a lower interest rate, and smaller payments than the original student loans.

Additionally, with a consolidated loan, you make one payment each month at a fixed interest rate instead of several whose interest rates may vary, and you can stretch out the repayment terms of your college loans to better suit your after-graduation finances.

The notable exception to student loan consolidations are for students who have Perkins Loans. These student loans are eligible for complete forgiveness if the borrowers enter certain fields after graduation and remain employed in them for five years. If the borrower pursues work in an eligible field for less than five years, he or she can still receive partial forgiveness for their remaining debt. Additionally, Perkins loans have a fixed 5-percent interest rate which may be lower than the rate available for consolidated loans.

After graduation, you normally have some period of time - about six months - before you’re required to start making payments on your student loans. Check with your lender(s) to verify the deferment period on each of your student loans. This grace period is meant to give you time to find a job and settle into your new life before you need to start repaying your student loan debts. Many graduates use this period of time to “ignore” their student loans. This is a mistake! Your college loans are waiting for you, so you should use the grace period to make plans for them.

The student loan consolidation process can take 60-90 days. Use your grace period to research and set up a student loan consolidation package for yourself. You’ll avoid having to make two or three months of unconsolidated loan payments while you complete the student loan consolidation process.

While you’re consolidating your student loans, look for some sound financial planning advice to help you manage your expenses, and build savings for yourself. Financial planning services are available for people of all income levels and can help keep you on track toward your financial goals. Your bank or credit union may be able to provide you with some financial planning resources.

Don’t look at your grace period as simply a “payment-free” time. Use your grace period to set up repayment plans and the financial management tools you’ll need throughout your life.