Typical Student Loan Consolidation Interest Rate for 2011

College students graduating today are likely carrying a large amount of student loan debt. That debt is usually in the form of many separate loans and separate payments, sometimes to various lenders. Taking all of those loan payments and combining or consolidating them into one single loan payment would certainly make repayment easier. Student loan consolidation simply means taking all of your student loans and combining them into one single debt repayment plan. It’s a good plan but there are a few things you need to know in order to get the best interest rate on your loan.

Check Out Interest Rates

Interest rates continually fluctuate, seemingly by the hour. That means you’re going to have to keep an eye out for the best deal, and move quickly when your see it. There are many other factors which cause fluctuation in the student loan consolidation market including loan rates that are tied to certain financial indexes, stock markets, and even currency trading.

For example, federal student loan consolidation is based on the 91-day Treasury bill’s last day auction rate in May of each calendar year. Rates can fluctuate on Stafford loans from 4.70% to 8.25%, and as go as high as 9% for PLUS loans. Typically, the interest rate for a federal student loan consolidation is based on the rate of interest at the time of the loan.

Student loans from private lenders are different. There are likely to be some additional fees and possible penalties. The factors used to calculate the interest rate for repayment is determined by each lender differently. Be sure to get assistance from someone who knows their way around the student loan consolidation business. When you make a deal with a lender to consolidate student debt, you’re going to be locked in for quite awhile, so be sure you’re getting the best deal.

Repayment terms, fees, penalties, and interest rates for student loan consolidation can vary widely and may even be subject to changes along the way. Over the life of the loan, it is possible to have two or more different interest rates. Some interest rates are at one level while you’re in school and may change after you graduate.

How to Get the Best Interest Rate on Loan Consolidation

There are actually a large number of lenders out there who will work with you to get your education loans consolidated. One of the primary factors lenders will look for when considering your particular situation is the past payments history on all of your previous student loans. Did you have some late or missed payments? Did you make your payments on time? If the payment history for your current student loans is flawless, then you’re likely going to be able to get the best interest rates and lowest fees on a student loan consolidation.

However, if you were late with a few payments, missed a few payments, or if you have defaulted on previous student loans, the likelihood that a lender will consider you for a student loan consolidation is low. Lenders may consider you to be high risk. If a lender will work with you, your interest rate and fees will most likely be high. If you’re in this situation, you may want to consider a cosigner who is creditworthy in order to get the best interest rate possible.

Other Factors That Affect Interest Rates

Are you extending your student loans on which you have deferred payments or is this a fresh loan on which you are currently paying? If you are looking for a student loan consolidation for a loan in which the payments have been deferred, the lender is most likely going to assess some fees or possible penalties, and offer a higher interest rate. If the loan is fresh and you are current on all your payments, the chances of getting a better interest rate go up.

One note of caution: some lenders advertise a certain low interest rate to attract more borrowers. This is very common on some of the websites that offer comparison rates for student loan consolidation. A lower interest rate advertised on a comparison website may not apply to your particular situation. You need to know what your credit score is and the state of your creditworthiness before you apply for a loan or sign any documents.

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Posted in: Business,Student Loan