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Consolidating Private Student Loans: Best Terms for Your Situation

Graduation is supposed to be a reason to celebrate, but for many college graduates it marks the end of the deferment period for loan repayments, and the start of a time when real financial pressure needs to be faced. Consolidating private student loans is the best option for most graduates.

Even for graduates who have been in the working world for a number of years, there is a chance to get onto a loan consolidation program that will lower the monthly repayment sum and ease the financial pressure on them.

But whether a new graduate or a long-standing one, the right terms are needed to make sure the full benefits of the exercise are enjoyed. Clearing the student loans is the ultimate aim after all.

For Recent Graduates

The terms secured when consolidating private student loans are always crucial. However, the best terms are often dependent on your situation. For example, a recent graduate will still have very little money at his disposal, as he concentrates on trying to get employment. So, agreeing a consolidation deal that is affordable is necessary.

While a low interest rate is always preferred, the type of rate is also a key. Someone with very limited finances is best served with a fixed interest rate, since it ensures a set repayment sum every month. This makes it easier to fit into a strict budget, which is often needed when taking on loan consolidation programs.

The alternative is to choose a variable rate, but this means the size of the repayment can change with the markets. When still seeking full-time work, the instability that a variable rate creates is the last thing that is needed. Consolidating student loans needs to be steady and sure.

For Long-Standing Graduates

It can take a few years for a graduate to finally turn to a consolidation program. The great advantage of consolidating private student loans is that they can be secured even 5 years after leaving college, as the pressures of working life are taking over.

Just as the type of rate is important for recent graduates, those who graduated years previously need to calculate whether a fixed or variable rate is best suited to their needs. While a fixed rate is ideal for keeping repayments constant, if the term of the loan consolidation program is long then a variable rate may be a good choice. Variable rates usually start quite low, and over a 10 or 15-year period, rates can fluctuate greatly but, on average, equate to less interest paid than a fixed rate.

Still, take time to carefully assess what is affordable before making any final decision. If the balance on the remaining student loans is very high, then a longer term is needed to keep repayments down. So, a variable rate is probably best.

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