When I was in law school I applied for and was given in excess of $70,000 in various student loans.
The interest rates on the loans ranged from 7% to 9% with several different repayment options.
Most of the loans allowed me to defer payments until after I graduated but continued to accrue interest on the outstanding balance.
After graduation the time came to repay the loans. I tried for almost a year to keep track of the different loan payments; their terms, payment dates, etc.
I knew that if I missed a payment or made a late payment the lender could accelerate the loan, increase the interest rate and sue me if I did not pay the loan off after acceleration.
I had managed to avoid real life for awhile while living under the bubble that is law school and had little experience dealing with real finances. By the way, bankruptcy does not discharge student loans.
Take Advantage Of The Offer To Consolidate
About a year after I graduated from law school I received an offer in the mail to consolidate my student loans and cut my interest rate in half.
About a year after I graduated from law school I received an offer in the mail to consolidate my student loans and cut my interest rate in half.
I was initially sceptical of the offer as it seemed too good to be true. I checked into it a little more and discovered that the Federal Government was in fact offering interest rate reductions for consolidation (I guess it makes it easier for them to keep up with your loan).
I also discovered that, in most cases, the Federal Government offers interest rate reductions for those who sign up right after graduation or at other eligible grace periods.
Other reductions occur when you have your payment automatically deducted from your checking account and when you timely pay on your loan for more than 6 months.
In addition to cutting my interest rate in half (7% to 3.5%) I was able to take advantage of the other incentives. My interest rate is currently around 2.25% on a loan that was originally 7% to 9%.
Remember, interest never sleeps, goes on vacation or takes a day off.
The best you can do is to pay the loan off in full or lower your rate until you can pay it in full.
Don't Throw The Offer Away
So when you get an offer in the mail to consolidate your loans at a reduced interest rate Don't Throw It Away!
It is most likely legitimate and will allow you to fix your interest in at a low rate and more easily manage your loan. Something else to keep in mind is that student loans cannot be discharged in bankruptcy.
That means you and your loan need to get along because you will more than likely be spending a lot of time with each other.
