What To Look For In Good Student Loan Consolidation Companies

By Andrina James

Taking a student consolidation loan at the end of your college life is one of the wisest decisions that you can take. As soon as you graduate and are within your grace period, start inquiring about student loan consolidation companies. You can even do it before to get a head start.

Why Will I Need Student Loan Consolidation Companies?

Most of college students graduate with a debt amount of nearly $20,000. They take loans from different lenders each with high fluctuating interest rates. When they go in for student debt consolidation, these loans are bundled together by the student loan consolidation company and paid off. The student then pays the new lender at an interest rate, which is much lower than the average of all the interest rates of the previous loans taken together. The time period is also long and students have different options of repayment. Thus, student loan consolidation save money and will also make life easier as there is only one loan to repay.

How Will I Spot A Good Company?

First, search on the Internet for information. You will get an estimate of what the different companies are offering in their student debt consolidation programs. Now contact them. Check the following list to know the company that you want to associate with

Do they have a competent student loan consolidation counselor to guide you through the procedure?

Do they explain all the charges and not ask for a large upfront fee?

Do they let you take your time before signing with them for a student debt consolidation program?

Do they clear all your queries and patiently hear you out?

Do they offer any special bonus or special discount?

Do they offer different types of payment option?

Are they accredited by the association of independent consumer credit counseling agencies to consolidate your loan?

If the answers to all the above questions are yes, then you have found yourself a good student debt consolidation company. Before taking their student debt consolidation program, do not forget to check on other offers in the market. Also, crosscheck the “Better Business Bureau” for the track record of the company. Don’t go for the first debt consolidation company you come across, remember your dealing with the company will go on for a long time. So if you feel uncomfortable with a particular company, walk out of it. There will be many student loan consolidation companies offering “no-cost” student loan consolidation, but don’t get lured by them. Always check the interest rate; it should be lower than what you are paying now otherwise you will end up paying more. Also, see that the company does not penalize you for returning your debt before time.

These are the points to look out for while approaching student loan consolidation companies. Take a good student loan consolidation and see your problems vanish.

Student Loan Consolidators Can Shop Around

On July 1, the interest rates for federal Stafford loans will hit the highest level since 2001. The rate for outstanding Stafford loans for the academic year 2006-7 will be 7.14%. New loans issued after July 1 will have a fixed rate of 5.8%.

A lot of student loan borrowers will be seeking out consolidation to lower that rate and their payments. And a new bill will give you a chance to shop around a bit more.

The emergency spending bill signed into law recently eliminated the “single holder rule”. For those of you who didn’t lock in your rate before July 1 — Saturday — you can shop around for a lower rate, since you missed out on one by not locking in your rate.

My parents still receive at least three phone calls a week from people wanting to consolidate student loans. And they haven’t had us living at home with them for years. You can pretty much expect to get more phone calls now that the single holder rule is null.

The rule used to require borrowers whose student loans were all with one lender to consolidate with that lender. They couldn’t go elsewhere for consolidation.

Now, you can shop around, no matter who holds how many of your student loans. However, you need to shop wisely.

Federal law bars most borrowers from consolidating their student loans more than once. You are never told this by the consolidating lender, but it is true. Once you consolidate with a lender, you are stuck with them for life — or at least the next 30 years or so.

So look around a bit before you consolidate. Many lenders have to use the government set rates for Stafford loans. However, they often offer you a reduced rate for having your payments automatically withdrawn from your bank account. Some will even cut your rate if you make so many payments on time. In total, you can have your rate cut by 1.25%.

Read the fine print carefully. Some lenders will take back that rate reduction if you make a late payment in the future.

Because a student loan is a long term debt, you should work with a company that treats you the way you want to be treated. It is probably best to go with a well-known company over one that has no track record. There seems to be thousands of consolidation companies out there (approximated by the numbers of offers I still receive in my mail), so you should be sure of any company you chose to do business with.

You can always call your college’s financial aid office. They will tell you if they have had any complaints about a specific lender. They can also suggest lenders that are good to work with.

Look at the level of service you receive from a company when you contact it. Do you sit on hold forever? Are you left with unanswered questions? Can you talk with the person, or is there a language barrier? I picked up the phone at my mom’s house and the company was calling to consolidate my sister’s loans. The woman couldn’t even pronounce the word “Sarah”. She thought it spelled “Shawn”. She spelled Sarah’s name, and then said she was offering a great student loan consolidation opportunity. I wouldn’t consolidate with anyone you cannot communicate clearly with.

Don’t spend so much time looking for the best deal that you waste time. Most lenders offer the same deals. Choose a reliable, reputable company and get to writing one check instead of three, four or even five a month.

Source: Martin Lucak,info student loan consolidation