Most graduates step out of college with student loan debts to face, and if you're one with several student loans to settle, it may be wise to consolidate them into a single loan. Student loan consolidation will make the debt settlement process more manageable for you, by allowing you to make single monthly payments on a fixed interest rate rather than having to deal with different rates from separate loans.
Lenders will be competing to consolidate your loan since there are those that specialize in this service. They will be presenting all types of debt consolidation packages with special rates or discounts, but be sure to read the fine prints of every offer you get to make sure you're actually locking into a lower monthly interest for all your student loans.
Once you have your student loans consolidated, you will be making payments on a new loan for at least the next 10 years. Consolidated student loans typically offer 4 types of repayment options.
The first is a standard repayment package which requires fixed monthly payments throughout the life of the loan. This works fine for those who find the monthly dues affordable, so you don't have to deal with varying amounts as the years go by.
You can also opt for a graduated repayment plan which works best for those who will be paying off the monthly dues from income generated through employment. It allows you to start off with low monthly dues which can be set for the first two to 5 years, after which they begin to increase up to the tenth year of the loan. This type of payment makes a lot of sense for many since the typical path of employment allows your income to increase as you spend more years on a job, although this will also translate to bigger interest expense over the life of the loan. It can also bring up an issue whenever there are lay-offs or pay cuts during your employment history.
An extended repayment plan is also available and is very similar to a standard package, except for the number of years you get to pay for the loan. You can pay for 12 to 30 years with lower monthly dues on this one.
Lastly, there is the income-contingent repayment plan which takes into account your total loan balance and living expenses weighed against your income to determine the monthly payments you make on your consolidated loan. It can be extended over a maximum period of 25 years.
So you have a lot of repayment options to make student loan debt settlement more manageable. Check out which one works for you best.