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| Understanding Florida Repay Teacher Student Loans Title I |
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Should you consolidate student loan bills?
Make the right choice
on grace periods, length of loans and consolidation.
By: Pete Glocker
Let's see here, you just graduated college and got hired at your first
job. It is now a month before holidays and (two, three or four) different loan
companies send you statements in the mail informing you that you have to start
paying on your student loans next month. You must be thinking, it is the holiday
season and I have to buy gifts and pay my bills. How am I going to afford to
start paying off my student loans? Here is how.
Grace Periods
Many recent college graduates choose the option to defer their loans for
six months. That is how long the grace period is for student loans. It may be a
good idea to take advantage of this option if it took you a while to find a job
or if you are starting out on a low salary. Most entry-level positions do not
offer the highest salaries. However, if you do have a decent salary job or if
your loan is not tremendously high, it may be smart to start paying right away
because the faster you can pay off your student loan, the easier it would be for
you to buy a house and save money for the future. Remember, you will have to
eventually have to pay back your student loan, so the longer you prolong paying,
the more time it will take you to pay it off and the more it will cost you in
added interest charges.
Length of Loans
Student loan repayments
are usually scheduled over ten years. Lenders can have the option to have
floating interest rates on loans, but cannot exceed 8.25 percent due to Federal
Government laws. So obviously, the shorter the length of the loan; lenders have
less of an opportunity to change your interest rates. Many lenders give you the
option of extending your repayment length. Students with $60,000 or more in
student loans may opt to extend their payment period up to thirty years.
Basically, it is common since; the shorter the payment period of the less money
you will spend on interest.
Consolidation
If you have three or
more different lenders like most students with the government issued Stafford
Loans, it is definitely in your best interest to consolidate them into one. The
reason being, you can have one loan with a locked low interest rate. Most
consolidated loans have an interest rate of five percent or less. So instead of
paying three different payments with different higher interest rates, it is best
to have one lower fixed rate.
Remember, student loans are a financial
obligation that will affect your credit history and influence your credit score
.Be responsible, pay them off in a reasonable amount of time, pay them off
sooner and you could save thousands of dollars in interest. The dollars you save
could be the down payment on your first home.
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