Student Loan Consolidation Explained with Play-Doh

The Financial Aid Podcast is a publication of The Student Loan Network. Visit us at the web band www.financialaidpodcast.com. If you have questions and comments about anything in today’s shows, send me some feedback at financialaidpodcast.gmail.com. Hey everybody, this is Chris of the Financial Aid Podcast.

And today we’re going to cover loan consolidation with Play-Doh. Okay, let’s start with the basics. Why consolidate your student loans? Well if you have five different student loans, you’re going to make payments on them, that’s. So the first thing consolidation does is of course take all your payments and all your loans, put them into one. Now the convenience of having all your loans in one, that’s pretty nice. It works up for you well, very convenient, very easy to use, right? There’s more.

In addition to the convenience of loan consolidation, combining your loans into one, you can actually spread your repayment term. Let’s say this is your combined student loans, all your Stafford loans. This is what your loans looks like spread out over ten year period of time. Now let’s take that and let’s make some monthly payments out of this.

So this would be one of your monthly payments. And if that’s okay, you know if you’re okay with that if you’re comfortable with that as a monthly payment then great. You probably don’t need to consolidate. But if you wanted to save more money each month, here’s how this works. Let’s say these same loans, these same loan belts right. Let’s stretch it out over a 15-year period of time.

So your new loans are a 15 year period of time. Again let’s make about the same amount of cuts here representing your monthly payments. By the way, this is not at all scientific. Now here’s your first here’s your monthly payment, your monthly payment. That’s a lot smaller than it was up here. Granting you can’t tell that easily, but this is a lot smaller than it was up here. By stretching out your repayment term over 15, 20, 25 or even 30 years depending on how much you owe in loans. This will save you money because your monthly payment it that much smaller.

Now let’s cover one of the most important benefits of student loans consolidation, the extra borrower benefits. You have two major benefits: 25% ah this is 0.25% off with Automatic Check Account Withdrawal and the 1% off after 36 months of on time payment for your thousand over $20,000. What will that do to your loan payments? Well, let’s say you’ve made, I’ll throw that as your first payments and here’s what you have left in your loan payment time. The benefits, what they do is that they actually trim loans trim payments off at the end of your loan.

So what that means, you just pay this much now. These payments just go away as part of the benefit. So you actually paid less time on the loan than you would normally. That’s a great benefit because really you know lot of extras . I hope you found this presentation to be informative and helpful for understanding the basics for student loans consolidation. All you’re doing is taking your loans, stretching them over a longer period of time and then cutting off the pieces at the end if you take advantage of the borrower discounts. You can find more information about this at a free website studentloanconsolidator.com or go to my website FinancialAidPodcast.com where you can consolidate your federal student loans online. Or give us a call at the office here 877-328-1565. I’ll see you all next time. Take care.