Consolidation

Consolidating your student loans is one of the easiest ways to pay them off. There are three advantages to consolidating student loans:

• You get a fixed interest rate.

• You make one payment for multiple loans.

• You choose the repayment terms.

When you consolidate your student loans, the financial institution with which you consolidate contacts all the institutions you currently have student loans with. They pay off all your student loans and create a single loan. This loan has a fixed interest rate and allows you to make one monthly payment instead of several.

When choosing a financial institution to consolidate your loans, there are two factors that you should use to determine the best for you.

• What interest rate are they giving you.

• What is the repayment schedule.

The interest rate of most loan consolidations is similar. It is determined by the federal interest rate and may vary by only 1 percent from institution to institution. A more important factor when choosing a financial institution to consolidate your loans is the repayment schedule. You have options as to how long you want the loan to be for and how big each payment is.

Be sure to choose an institution that gives you both a favorable interest rate and repayment schedule.