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The Low Down On Consolidation Loans

By Mark Brenner, Vice Chairman and Executive Officer, College Loan Corporation

With your final semester of high school ahead of you, it might seem like it's too early to start thinking about college graduation. But it pays to think about one aspect of commencement as early as possible: student loans, and repaying them.

It's a fact: getting a degree is more expensive than ever. Last year, average undergraduate tuition at a four-year public university jumped 10.5 percent, pushing the average price of attendance to $11,354 per year. Private college undergraduate tuition now stands at an average of $30,295, according to the College Board.

If you're like most of the college class of 2006, you'll probably take out some student loans to pay for college. In fact, the average graduate now leaves school with an average of $20,500 -- and counting -- in loans, according to the U.S. government. That may seem like a daunting amount, but luckily there are options that make paying that debt more manageable. For most graduates, federal consolidation loans offer an affordable alternative to simplify your payments while locking in today's low interest rates.

Most of the loans that you might take out during school can be consolidated. Although tuition costs are soaring, interest rates on student loans are currently still low. This means that after your graduation, you will have the perfect opportunity to lock in historically low interest rates that remain unchanged for the duration of your student loan payments. Also, by consolidating as soon as you graduate, you can reduce your interest rate an additional 0.6 percent because you are consolidating within your loan's "grace period."

So who is eligible for consolidation? Students are eligible to consolidate federal family education loans (FFELs) and parents can also consolidate their parent (PLUS) Loans. Typically, you need to be out of out of school and either in the grace or repayment period of your loan. Be sure you know your grace period before you even accept a loan. Most lenders also require minimum total loan balances -- usually about $10,000 -- to consolidate.

There are no application fees, credit checks or cosigners needed for a consolidation loan. With the many options for student loan refinancing, including private, non-profit and government lenders, borrowers should consider the quality of service, expertise and integrity of the loan professional, payment options and repayment incentives when choosing their financial partner.

If you want more information on your future consolidation options, call College Loan Corporation 24 hours a day, 7 days a week at 1.800.2COLLEGE. One of our experienced Loan Consultants can take a look at your current situation and explain the best options for you. If you choose to consolidate, we can help you navigate through the paperwork and explain the benefits to you.