|Total amount paid||$31,757||$31,857||$28,449|
|Payoff date||October 2034||October 2034||October 2034|
Total amount paid
Student Loan Consolidation Calculator: An Overview
A student loan consolidation calculator is a common tool used to gain key insight into student loan repayment.
Student loan consolidation means to group multiple student loans under a single loan. In other words, if you took out more than one student loan, you can combine them into one big one.
Doing so allows you to make just one payment monthly as opposed to several.
Consolidating a loan is one of the strategies that student loan borrowers use to eliminate debt.
In light of Forbes’ recent report of the current student debt crisis, borrowers are bound to devise new ways to combat student debt.
After all, Forbes did make mention of the $1.6 trillion student debt issue that the United States is facing.
For this reason, borrowers use calculators to organize their finances ahead of time.
How Does the Student Loan Consolidation Calculator Work?
To begin, you’ll need to input specific information about your existing loans. To be specific, you must know the following:
- Loan Balances On All Your Student Loans
- Interest Rate On Each Of these Loans
- Your Current Monthly Payment On Each Loan
- The Type Of Loan (Federal or Private)
Granted, you do not need to input truthful data in order for the calculator to work. That said, you should if your goal is to get a real sense of what your payments can look like.
Populate the fields with the information solicited. Once you’ve done that, click ‘Calculate’ and the student loan consolidation calculator will generate results.
To generate the new interest rate, the calculator uses the average of the interest rates that you input.
Consolidate Student Loans: Pros
When you consolidate student loans, you need to bear in mind that there are pros and cons to doing so.
First, let’s take a look at the pros:
- Easier Management of Finances – This is one of the major benefits of consolidating loans. When one has multiple loans, it can be challenging to keep track of them all. For that reason, merging them into one helps the borrower to better manage their repayment strategy.
- More Time To Pay Off Loans – On each of your student loans, you will have a time period in which you must repay each one. If you consolidate your loans with a private company, you can negotiate a more favorable repayment plan for your pockets. A longer-term means that you’ll spend less on your monthly payments.
- Freedom To Choose Your Lender – If you have federal loans, you had no choice when it came to your lender. You were assigned one and there was nothing you could do about it. If, however, you decide to consolidate your loan, you have more flexibility. The State allows you to choose one out of nine lenders to handle your debt moving forward.
Consolidate Student Loans: Cons
While the pros are attractive, there are some downsides to consolidating loans, including:
- You Pay More in Interest – An extension in your repayment term equates to you paying more interest. This is because the longer you have a loan, the more interest is charged to it. Even though in theory, your monthly payments will be less, in the long run, your interest payments will exceed what you would have paid otherwise.
- You Don’t Save Money – As a consequence of paying more interest, you don’t save money. With a student loan consolidation calculator, you will discover that your total monthly payments add up to more than the total amount you’d have invested with another plan.
- You Give Up Federal Loan Benefits – When you consolidate federal loans, you relinquish any rights you have to federal loan benefits. These benefits include deferment and forbearance options that would help you to manage your loan payments in a time of financial crisis.
Student Loan Consolidation Calculator: Verdict
Deciding whether or not to consolidating your student loans is the right decision is not always easy.
There is no right or wrong answer. It depends on your finances and personal preferences.
While consolidating your loans, it helps to organize your finances, it implies that you’ll be spending more than you need to.
If you feel like it’s the best option for you, go ahead and consolidate your loans. Just remember to use a student loan consolidation calculator to help you organize your finances.