Educational Loan

"How do I decide where to consolidate �C I get so many offers?"This is perhaps the most important question to address … My experience with consolidation issues over the past several years has drawn me to one primary conclusion �C the 'financially smart' place to consolidate is not going to be the same for every student; it is largely a factor of how you plan to repay your debt.(1) If you haven't borrowed much or plan to repay your debt quickly, you should search for a company that will reward you for doing so. This benefit will normally come as a principal balance credit. For example, Key Bank offers a 5% credit for consolidating with them. Some companies will provide a max credit, as well as other 'fine print' caveats, so read the application. While a couple 'Benjamins' is nice if this is my situation, if I have a long-term repayment scenario, being enticed by this type of benefit would be a big mistake!(2) If I find myself in a 'long-term' repayment situation (I'm going to define this as 10 years or more of repayment anticipated), the best "deal" for me would be the company that will reduce my interest rate the most. This won't solely be people that have large debt levels; these will also be individuals that wisely consolidated during the past couple years when rates were at historic lows and they see an opportunity to repay their debt at amazingly low levels and want to minimize that payment while they invest, prepare for homeownership, and focus on other financial goals. Your baseline when comparing rate benefits is to understand that an "average" company will offer a 1.25% reduction (normally .25% reduction for auto pay will be provided along with a 1% reduction in rate for on-time payments [normally of 36-48 months]). As part of the resource links below, I provide links to state programs that provide 'above average' benefits, like North Carolina, which offers a 2.25% total benefit for automatic and on-time payments. Information about the programs as well as other information are available below …(3) The first two scenarios will cover most individuals, however, some individuals will have borrowed too much to pay off quickly; others may be debt averse and don't want to extend it, so they fall somewhere in between the above two options. In this case, where you plan to repay your debt over an 'intermediate' term, review a company that will provide interest rate benefits (these will almost always work out better than the principal credit benefits) where the benefits are offered up front. For example, the Educational Loan Company offers a better than average rate reduction benefits (1.75%), but rather than needing 4 years of on-time payment, .5% of the benefit is up front for auto pay and 1.25% is available after only 24 months of on-time payments.NOTE. Three things I want to emphasize. (a) These are general guidelines/rules of thumb �C run the numbers to see what will make sense for YOUR LOAN SITUATION. (b) Read the applications to see if there are caveats �C for example, the principal balance credit by Key Bank is foregone if you defer or forebear the loans during the first 36 months of repayment; Educational Loan Company requires you to be consolidating at least $10,000 total in debt. So read through to make sure the program fits with your situation. Don't, however, assume that you're not eligible either. It's easy to say "I'm not from North Carolina, so I can't do that" when the reality is that if you're willing to spend 5 minutes, you can create a connection that will enable you to be eligible for their program. Thus, (c) BE SMART and take a few minutes to figure things out, it will be well worth your time!