When the time has finally come for you to make your student loan payments you may start feeling overwhelmed with the amount you have to pay monthly and the numerous lenders you have to pay to.

1. Research

To make life easier, you first step is to research different student loan consolidation programs. There are basically two options which will be available for consolidating your student loans, federal and private.

2. Federal or Private Student Loan Consolidation Program

The first option is a federal student loan consolidation program. This type of program should normally be the first choice of any new graduate because it offers numerous benefits. Federal student loans normally offer lower interest rates and have easier credit requirements.

With this type of student loan you can also arrange for longer payment terms resulting in smaller monthly payments. Another benefit of federal student loan consolidation is the option to postpone payments in case you cannot find a job and are unable to make payments.

A federal student loan consolidation program is perfect for those who just finished school and have not yet found a good job in their field.

Private student loan programs on the other hand will most likely charge you higher interest depending on the state/province you live in. The terms of private student loans will differ depending on the lender so it is very important to approach different lender to find the best deal. Additionally, the interest rate of the student loan will usually depend on your credit score so it’s very important that your credit history is clean.

You will also need to show a source of income to assure the lender you will be able to make timely payments.

With private student loans you may not be offered a deferment option. On top of this you will probably have to find a cosigner to guarantee the payments incase you are unable to pay. However Private loan programs may offer you borrower benefits, such as interest rate discounts and rebates. Private student loan programs can also offer you repayment terms of up to 30 years depending on the amount of the loan.

For those students who have found good jobs and are making sufficient amounts of money, this type of loan can be a great way to reduce all your worries and consolidate all your payments into one.

3. Pick the best loan

Whichever option you pick, federal/private, make sure that you will be able to make the payments on time, every time. Don’t jump into the first deal that sounds good. Shop around and get quotes from at least 3 different student loan consolidation companies. Borrow wisely, because they money you borrow now can have long term effect on your lifestyle and small differences in interest can add up to large amounts in the end.

Posted in Student Loans