Why consolidate your student loans? Here are a few of the benefits:
- Lower monthly payments. By consolidating your loans, you reduce your loan payments each month, in some cases by up to 46%! That will leave you with extra cash in your pocket at the end of each month, enabling you to buy the things you need or pay down your debt even more.
- A fixed interest rate. Having a fixed interest rate these days is a smart bet. For the last few years Interest rates have been their lowest in decades, and the only direction for them to go is up. With a fixed interest rate, increases in interest rates don’t add extra dollars to your monthly payments as they do with flexible rates. A fixed interest rate gives you piece of mind.
- One lender, one payment. By consolidating your loans, you’ll be making one monthly payment to a single lender and will no longer have to deal with your previous lenders. To some this is a godsend.
- No fees or credit checks. When we say no fees, we mean it. By consolidating with great companies you won’t be charged any service charges, bank charges or prepayment penalties, even if you pay off your loans sooner than expected. When we say no credit checks, we mean it. Your eligibility into the program doesn’t rely on your credit rating, so good companies won’t ask for it.
- Interest is tax-deductible, lowering your cost of borrowing even more. The government allows a special deduction for interest paid on student loans (also known as education loans). This deduction will reduce your taxable income up to a limit of $2,500 (in 2012), lowering your total tax payable, reducing your cost of borrowing even further.
(Tax information is provided as a general overview. Student Benefit Services is not engaged in rendering legal, accounting, tax or other professional advice services, and we are not qualified (nor is it our intent) to provide individual tax advice. To determine your eligibility and learn how these benefits apply to your specific situation, we encourage you to consult with your tax advisor and review IRS Publication 970 for details.)
- Improves your overall credit rating. When you apply for credit, such as a mortgage or credit card, lenders evaluate your credit rating as part of their application process. Your credit rating takes into account the total number of creditors you have, as well as the balance of your outstanding loans. By consolidating your student loans, you decrease the number of creditors, thereby enhancing your overall credit rating score.