How much can you REALLY save by consolidating? | 02.25.10
Let’s say you took out $25,000 in federal loans for college. Now that you’ve graduated, you’re grace period is almost up and the payments are expected soon. It’s a tough time for any graduate, particularly those who might not have found a job yet. The last thing you need is another monthly bill to pay.
But by consolidating your loans, you spread out your payment plan and the new interest rate is a weighted average of your previous rates, which can save you money in the long run.
Take the aforementioned $25,000 debt. With a 6.8 percent interest rate, you can consolidate to a low payment of $192 per month. If you don’t consolidate, that payment becomes $288 per month. That’s a difference of $96 per month, or $1,152 per year. What can you do with an extra $1,152?
- Buy a big-screen HDTV.
- Take a vacation.
- Pad your savings/build up an account for graduate school.
- Pay off your loans quicker by contributing the difference to your monthly payments.
Do any of those options sound good to you? Then consolidate now!
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