Time to Consolidate Student Debt at Catch a Gideon

December 1st, 2006 by digerati

Attention, Class of 2006: It’s been almost six months since you were handed your diploma, and that means the grace period for student loan repayment is almost up.

Here’s what you need to know before you start paying down your student loan debt:
If you have several types of student loans, you can consolidate them into one loan that has a monthly payment at a fixed rate. Consolidate before your grace period is up and you’ll receive a 0.6% interest rate reduction. This could save you hundreds — even thousands — of dollars in interest during the course of your repayment. To find out when your grace period officially ends (because it varies by school), contact your lender.

You’ll have more flexibility if you consolidate. Your repayment period can be extended from the standard 10 years to up to 30 years, depending on your principal balance.

Thanks to a new law enacted this summer, the members of the Class of 2006 are the first to be able to refinance their loans with the lender of their choice, rather than being tied to the original lender. This law allows graduates to shop around for extra benefits. Many student loan providers offer perks such as interest rate reductions for enrolling in automatic payments. Others, such as College Loan Corporation, offer cash rebates to grads who consolidate and make nine payments on time.
By MARSHALL LOEB
From MarketWatch