When you consolidate you simplify life

When you consolidate your Stafford loans you're saying two things about yourself. The first is that you don't want the hassle of having to make multiple loan payments each month. The second is that you like money and want to save as much as possible. A Stafford loan consolidation can help you do just that. It takes all of your outstanding Stafford loans and combines them into one bigger loan, usually with a longer repayment period and in some cases, a lower interest rate.

Stafford loan consolidation eligibility

Who is eligible to take advantage of consolidation? Essentially anyone with outstanding Stafford loans provided that they have already graduated from college or they have stopped attending completely. However, here is one piece of advice you may want to consider before consolidating: wait until your six month grace period is over or nearly over, before you consolidate. This is because as soon as the new consolidation loan goes through all grace periods you may have had on your outstanding Stafford loans are cancelled out. Make sure and take advantage of this aspect of your loans. Accruing interest on any outstanding unsubsidized Stafford loans won't be enough to significantly affect the total balance of the loans.

Two consolidation pitfalls to be aware of

When you consolidate outstanding Stafford loans the benefits usually far outweigh the pitfalls; however, there are two which you should consider. The first is the interest rate. A new interest rate will be established for your consolidation loan based on the weighted average of the interest rate on all of the loans you're consolidating. By law it cannot exceed 8.25%; however, you may find that your new interest rate is not much lower than the highest interest rate on your Stafford loans. If this is the case don't worry. This brings us to the next point: the repayment period. You need to understand that it is not the interest rate that plays a part in lowering your monthly payment, but the length of time you're given in which to repay the new consolidated loan, which can be as long as 25 years. Most financial institutions want you to believe it is the interest rate, but in reality it is the amount of time you're given to repay the loan.

Consider consolidating your Stafford loans

Regardless of how long your new repayment plan is, you may find it beneficial in the short term because it will provide you with some extra cash. And because there are no repayment penalties when you consolidate Stafford loans you can always pay extra towards the loan as you establish yourself in a career and make more money. All told, consolidating your multiple Stafford loans is an option to strongly consider.