If you are like most college students then there is something you will definitely want to do. That “something” is called “saving money”! Whether you need extra money for a house, car, wedding, furniture, whatever; you will need to save that money somehow. And what better way is there to save money than by consolidating your debts through a student consolidation loan.

First, let’s start with the basics. What exactly is a student consolidation loan?

A student consolidation loan basically combines all of the loans you acquired over the course of your studies into one convenient student consolidation loan. With a student consolidation loan all you have to do is make one payment to a single lending institution instead of two, three, four or even five different ones. And the best part is you get to save your money by getting a lower interest rate.

Let’s look in more detail at how a student consolidation loan works and how you can benefit from it.

Let’s say you need money to cover your tuition. You approach lender “A” and he gives you a loan with an interest rate of 5.5%. Later however you realize that you have underestimated your living expenses and you need to take out another loan. You approach lender “B” and get a second loan at 5% interest. Everything is going well and you are happy. However in you last year you realize you need to get an extra credit so you approach lender “C” and get a third loan at 6% interest.

Later you graduate and start to receive monthly bills from 3 different companies. On top of this you realize you don’t have enough money to make the payments because you don’t have a high paying job just yet. So what do you do?

The answer is simple. Consolidate your student loans.

You now approach lender “D” (student loan consolidation service) and ask them to consolidate your student loans. Lender “D” analyses your situation and agrees to help. He goes to the first three lenders, pays off all your debts and gives you one loan with an interest rate of 5 %.

To make this clearer lets use some real numbers.  Let’s say you have one loan for $32,000 and you are making $300 monthly payments. You have a second loan for 8,000 and you are paying $85 per month. And your last loan is $2,000 and you are paying $30 per month. All together you are paying $415 each month for your loans. By consolidation these three different loans with one student consolidation loan you can be paying roughly $245 per month for 25 years. That’s $2,040 less per year. Keep in mind however, that by making smaller monthly payments you will pay more money in interest fees over the course of the loan period.

Before you rush to consolidate your student loans do some research first. Check out many different student loan consolidation services and try to get as low an interest rate as possible. Also take a good look at the different websites that offer student loan consolidation, you may find a great deal with them too.

Posted in Student Loans