Graduation is sweet. All the hard work that you’ve put through the years to secure a better life for yourself and your loved ones will get certified. But as you near the “G-Day”, so does the beginning of the grace period after which you must start paying back all the loans.

This means that during the grace period (if you are not already in one) you’ll be spending a lot of your time planning the best ways to juggle multiple loans, and their multiple and varying interest rates, terms, and monthly installments. As a result, you will be spending a lot energy trying to keep the exacting loans from affecting your plans for your life.

If you professionally consolidate your student loans, you will have a single, more manageable, and far less exacting loan for yourself.

Advantage #1: Consolidation Streamlines the Payment Process

Consolidation refinances all of your loans into a single loan with newer terms of agreement. How is it done? Well, you search for a lender who will pay off all your previous loans in one go and create a newer loan. This new loan will have different and reduced interest rates, monthly payments, and a longer loan term – in a phrase new and revised loan terms to suit your circumstances. What’s more is that you can easily defer payments because now you have to negotiate the terms with a single lender only.

As a result, the whole process is streamlined according to your needs. This gives you a clear idea of how to manage your finances.

Advantage #2: Consolidation Reduces Your Interest Rate

That’s right! When multiple loans are consolidated, a weighted average is taken for the interest rates of the previous loans. This results in a significantly reduced interest rate on your loan. Furthermore, a consolidated loan is also tax deductable and can save you $2500 in interests (See IRS Publication 970 chapter 4 for the calculations!).

The point is that consolidation not only reduces the overall interest you have to pay each month but also keeps your efforts focused on a single point.

Advantage #3: Consolidation Fixates Your Interest Rate for the Loan Term

Interest rates vary according to lender preferences, market fluctuations, and the bills Congress deems fit to pass. A case in point is the doubling of interest rates for the Perking loans from 3.5% to 6.8% and a whopping 8.25% for loans offered after 2015. Consolidation grants you the luxury of having a fixed interest rate for the entirety of your loan term.

Hence, you can easily predict how much interest you have to pay and plan your financial goals and savings accordingly.

Advantage #4: Consolidation Extends Your Repayment Term

By extending the loan term, you benefit on two fronts. First, your monthly payments are significantly reduced, and secondly, a longer term means that you do not have to worry about any impending deadlines if you continue to pay as scheduled.

As a result, you can save and invest money for your retirement or a house of your own.

Consolidating multiple loans on your own can be daunting and professional consultancy will always prove beneficial for people who keep abreast of the changing terms and conditions.

Read our 2-part guide now if you are eligible for consolidation [Are You Lost In Loans?], and our DIY consolidation research tips [Look Out! Don’t Miss These Research Tips]

Sources
http://www.usnews.com/education/blogs/student-loan-ranger/2011/01/19/4-reasons-to-consolidate-your-student-loans
http://www.investopedia.com/articles/younginvestors/09/consolidate-student-loans.asp
http://moneyfor20s.about.com/od/managingyourstudentloans/ht/studentloancons.htm