Bundle Your Education Loans Cheaply
The Eye of the Beholder
Everyone wants something for nothing; it's the American way. We bargain, haggle and shop for discounts. Student loan consolidation is no exception. How can I roll my monthly student loan payments into one teeny tiny payment that doesn't cost me much?
The banking and lending business is no place to shop for "cheap." However, there are consolidation loans that are more affordable or cheaper than others.
What is Cheap?
Cheap is subjective. Cheap could indicate loans without high fees or high interest rates. It could refer to a low monthly payment. It doesn't mean free. In fact what you may consider cheap in the short-term could seem expensive in the long-term. Low monthly payments are made possible when your consolidation loans are extended for a long period of time, sometimes up to 30 years. In that time you will have paid exponentially more for your college tuition than what you had initially financed in your standard student loans.
The Good Shopper
Apply the right shopper's know-how to your student loan consolidation search and you'll likely cull the best deal from the slew available. Direct Consolidation Loans are those financed through the Department of Education. Borrowers with a Direct Federal Student Loan may be eligible for the cut-rate federal deal; it comes with few lender-type strings attached. Borrowers through the Federal Family Education Loan Program (FFELP) should shop the general population of student loan providers, such as Sallie Mae, and private banking lenders, the likes of Bank of America. Within this realm you'll find the standard terms already set by the government, along with a number of lender-specific perks, fees, and other borrower incentives. These "extras" are what will determine how much of a deal or how "cheap" the consolidation loan is.
The Best Deal
The best deal is borrower dependent. What works for you, may not work for another.
- Borrow on the federal government's Direct Consolidation Loan program and you likely will appreciate the lack of fees, and lack of required minimum to borrow. You may also qualify to consolidate any federal defaulted loans. The interest rate is a standard fixed rate based on the weighted average of your federal loans on the day you apply to consolidate. Interest rates may not exceed 8.25.
- Private FFELP lenders feature a federal consolidation loan also fitted with the standard fixed interest rate, the same as the Direct Consolidation Loan, above. You will not be subjected to a credit check or any fees, but you will in most cases have to carry a certain amount of federal loan debt to qualify for consolidation. Shop the lowest minimum for the best deal. Other cost cutters include interest rate deductions such as: consolidation during new-grad grace period, so many consecutive and on-time payments, automatic payment plan. Save more money with lenders that offer cash-back bonus incentives, usually based on the total amount you will consolidate.
The Deal in Private Student Loan Consolidation
Borrowers with private student loans to consolidate must adhere to a different definition of cheap. Private lenders with their own brand of student consolidation loan are not selling "cheap." However, they do offer competitive incentives that are designed to lure customers.
- Shop for the lowest required minimum.
- Shop interest rates. Most are variable but may be adjusted differently.
- Shop for loans without esoteric fees.
- Save money with interest rate deductions for on-time payments and automatic online payment plans.
