What is the best way to pay off both student loans and private student loans?
Kenny N. from Arkansas asked: I used a mixture of Federal and Private Student Loans during college. My grace period ends in about a month. Is there a better way of paying my student loans off rather than paying each separately? There are I believe 3 stafford federal loans and 2 private student loans. Is there some form of consolidation I can do? It’s a real pain to be making 5 student loan payments every month. I’d rather just make one large payment.
Student Loan Advice: Well Kenny, you’ve came to the right place. You’ll be happy to know that you can get all those loans wrapped up under one consolidation loan in most cases.
Now, having said that, you may run into several road blocks along the way.
Due to the current financial crisis that has came upon many lending institutions, you may find that getting a student consolidation loan with bad credit or less than perfect credit is a little difficult, if not impossible. The loans are still out there, but the guidelines have tightened.
You’re probably going to be looking at a Private Consolidation student loan for paying off your student loan. The interest rates on those loans are pretty good right now, if you can qualify for them.
Just be aware that there are some pitfalls when you go to consolidate your student loans. Consolidation is not for everyone, although it sounds like it will work good for your situation.
You may want to try your local bank or credit union before seeking other lenders. Sometimes they have better rates than the big national lenders. This is especially true if your anchored in your community.
If you have to go to a national lender to pay off your student loans, shop around first. There is a big difference in student loan lenders, especially student consolidation loans for students with bad credit. It doesn’t take many blemishes on your credit report to throw you in to a high interest rate or disqualify you altogether.
Of course, if consolidation doesn’t fit into your repayment plan, you could always develop a budget and pay the student loans off like Dave Ramsey recommends paying off consumer debt.
What you’ll do is make the minimum payments on all your loans. But any extra money you have will go toward paying off the smallest student loan first. Once you have that student loan paid off, you’ll take the extra money along with the monthly payment that the smallest loan had, and roll it up and start paying off the next largest student loan.
Once you get the first or second loan paid off, you’ll see the proverbial snowball begin to move and move fast!
This is a good technique for people who want to pay off their student loans fast and are willing to work extra jobs to do it. In this fashion, you won’t be one of those whiners crying about all the student loans they have to pay off.
Good luck Kenny on paying off your student loans!
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