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Should you consolidate your student loans?
By Michael Wilson of Value Property Investors
Should you consolidate your student loans, such as Stafford loans? This is one aspect that you may have the option to choose during the course of the loan or when you start to pay it off. It is one of the important features that will set the terms of your loans until you pay them off. Consider consolidation to lock in a low interest rate for the life of the student loan and minimize the complexity of payments to multiple loans. If you have the option of locking a low rate on one or more of your loans, you should consider taking it. Rates are relatively good right now, and are on the rise. You cannot predict the future of interest rates, or the timing of interest rate changes, so often it makes sense to lock in a fixed rate especially in a time of rising rates. In addition, there is some peace of mind knowing your payments are fixed. If you can lock in rates for each individual loan without consolidating, that may be a better choice. The reason for this is that you will have multiple, smaller loans rather than one single large loan. There can be benefits to this type of situation in some budget strategies. Of course you want to pay your loans off as soon as possible and that is a good idea. You don’t want to be in debt, you don’t want to spend your paycheck on loan interest, and really you just want to be done with them! Consolidating your loans and/or locking in a fixed rate is often beneficial. There are other features of student loan payoff that figure in, but it is important to look at the student loans in light of the larger picture of your current, and future, earnings and other aspects of your overall budget. Don't view your loans as a stand-alone entity, even if they are the only loans you have right now; there will be other debt and expense considerations. Typically, it makes sense to lock in a fixed rate in times of rising rates and to keep multiple loans separate; separate loans may also be a consequence of locking in rates as you go along. Finally, consolidation may make sense if it is required to get the best rate lock, but rarely makes sense in terms of pure convenience. There are several ways to pay off your student loans faster. Having multiple loans, rather than one consolidated, larger, loan can work in your favor. The best product we have seen, and the one we recommend to all of our clients who used loans to pay for at least part of their education, is the MMA Express. MMA stands for Money Merge Account and the MMA Express version is specifically designed for individuals with significant debt, such as student loans. This is one of the only student loan accelerator products that we have found that does not require refinancing. It can often cut the payoff time in half or less, so it is favored by students just out of college.
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Contributor's Note
Value Property Investors is active in all aspects of residential real estate with experience in many strategies for buying and selling. The company’s current focus is on helping homeowners and college graduates eliminate debt and strengthen their financial future.
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VPI Money Merge
| Smart Money For Life
| Family Financial Values
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Great post and great to see someone here from United First
CONTRIBUTOR'S REPLY
Thanks Brooke. I've gotten a lot out of UBranding and referencing your work on your Math Not Magic site. And certainly appreciate all your work that goes into that effort. Let me know if I can help. I've used the education to improve my own Smart Money For Life site.
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