Student Loan Reconsolidation: Haggling for a Better Deal

2007-03-08 10:33:40

( Financial )



EVER-CHANGING MARKET

When you refinance student loans through a college loan consolidation or a federal student loan consolidation program, what you actually do is have a lending company buy off and close your outstanding student loans. In turn, you end up owing a debt to one lender and need only to concern yourself with one simple payment calendar.

Because student loan interest rates are dependent on treasury bills, the rates fluctuate from time to time; and your rates are constantly adjusted to reflect these changes. Having to contend with irregular interests can be a headache and very difficult to manage, especially if you have medical student loans which is very costly and lengthy in payment terms.

One unique feature of consolidating student loans is that it locks the interest rates. Under a college loan consolidation, you will pay a fixed interest rate that corresponds to the prevailing market rates. Consolidating student loans makes them independent from the dictates of the treasury bills.

OPEN FOR NEGOTIATIONS

However, the present interest rates have been the lowest they have ever been. For those who have taken a college loan consolidation when rates were relatively high, you have the option to avail of a student loan reconsolidation to take full advantage of the present low interest rates.

Taking a student loan reconsolidation is actually to refinance student loans. Under a student loan reconsolidation program, what you actually do is renegotiate your existing consolidated student loan for lower interest rates and consequently lower regular payments.

A student loan reconsolidation program is recommended only to those whose consolidated interest rates are very high compared to the prevailing rates. Your new interest rate will be based on the fixed rate you have been paying and the present interest rates. Under the student loan reconsolidation program, you are guaranteed that your new rates, although not fixed, will never exceed your previous consolidation rates.


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