Student Loan Debt Consolidation Rates!

The rising costs of living and education both have forced most of the students to incur student loans. On an average the students rack up loans of about $10,000 or more. These loans have an impact on your credit and can also effect other decisions that you may need to take.

One thing that you should know is that monthly installments, toward repayment of loans, exceeding 8% of your income adversely effect your credit situation and can be a deterrent towards taking new loans.

It is now clear that you need to resolve your debt burden in order to improve your credit assessment. Two simple ways to do so are: a) try to reduce or eliminate the principal sum. Some of the student loans can be forfeited when you take up higher studies or by service. b) Cut down your monthly payment, as your credit worthiness is measured against it. the lower the payments made better the credit valuations.

Normally a student may have private loans or federal loans or may be a combination of both. Either ways your best bet to reduce your installments is to consolidate your loans. A consolidation of loans can be useful in more than one way.

The foremost thing to remember when you are going in for student loan debts consolidation is to never consolidate your federal and private loans together. You will end up losing out on all the benefits of federal loan and end up paying a single installment of private loan at interest more than you have to. Another thing to keep in mind is first consolidate your federal loans and then your private loans.

The interest rates for federal student loan debt consolidation have fallen considerably over the last year. Federal Stafford Loans disbursed during the period 1st July 2006 and 30th June 2008 carry an interest rate of 6.8% and since then the interest rates have come down to around 6%.

The interest rates for loans given before July 2006 remain variable unless consolidated. The federal student loan debts consolidation rates are build around the weighted average of interest rates for student loans.

The rates in effect since July 1, 2008 are as follows:

Stafford loans (in grace) – 3.60%, down from 6.62%
Stafford loans (in repayment) – 4.21%, down from 7.22%
Parent plus loans – 5.01%, down from 8.02%

Due to the falling rates of interest on student loans, in recent year you may even think of refinancing of your student loans at better rates. Even when you go in for student loan debt consolidation, your rates of interest go down considerably. A good repayment history may see the interest rates going more south.

Student loan debt consolidation helps to simplify the payment of your monthly installments. Once the loans are consolidated you will be paying a single installment to one lending institution. It makes it easier to keep track of your payments. With reduced monthly costs you have a better credit rating and also save more. Also there is a cap on interest rates so even if interest rates go up it will have no effect on your monthly installments.

The best way to spruce up your credibility and at the same time save more money is to go in for student loan debt consolidation.

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Student Loan Debt Consolidation Rates!