The job market looks good for new college graduates. Last year's college graduates entered the strongest job market in over a decade and good news for 2019 graduates -- employers plan to hire 16.6 percent more new graduates than they did last year. And if you chose a hot field of study, you may have several offers to choose from after graduation. That’s great, because before you know it, you'll be repaying the loans that helped you get your degree.
It can get tricky, especially if you took out multiple loans, have more than one lender, or have a combination of federal and private loans. Some come with extra benefits, like loan forgiveness if you go into certain fields. Some have fixed rates, others are variable and could change over the course of repayment.
One way to simplify paying off your loan is to consolidate them. One payment, one amount. You might even score a better rate, a lower payment, or more time to repay.
Convenience is a major reason people consolidate their student loans, according to Tom Becker, the Chief Lending Officer at Hanscom FCU. “If you took out a loan for each semester, that’s eight loans to keep track of. Many people consolidate to make payment easier and avoid a late fee from accidentally missing one,” he said.
Are there other benefits? It depends. “Once you graduate, you are less of a risk to the lender,” Tom explained. “Especially if you have a job, you could get a better rate or a lower payment by going through the underwriting process again.”
You could release your co-borrower from the loan. That will free them up to refinance their own debt, or take out a loan for something else.
If you are thinking about consolidating your student loans, or even if you’re just planning to manage the loans you have, here are a few tips from Tom:
- Always pay your loans on time and in full. We talk with people all the time who can’t refinance their loans because they missed a payment. Or they have to wait another year to release their co-borrower due to a missed payment two years ago.
- Keep your original documents in a safe place. All the information about your loan is in the papers you signed when you took out the loan. There are plenty of things you need to know, including the rate, whether your loan is fixed or variable, and what circumstances could put you in default.
- Get help. We can sit down with you and explain everything you need to know. Many people sign for loans without understanding everything. It can get complicated, but we have the experience to work with you and put together a plan that could save you money and time.
Student loans are a fact of life for many. Make sure you know the facts about yours.
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