Student loans can add up over the four or more years a student is in college in Texas. If there is more than one federal student loan to repay, it can become confusing and overwhelming for students. Just starting out in real life is scary enough; adding multiple monthly student loans on top of it makes it even scarier. There is a way for Texas graduates to have just one Texas student loan.
Consolidating Student Loans
When students have more than one qualifying federal loan, they can consolidate it into one low monthly payment. This has many benefits for graduates. It ends the confusion of multiple checks written each month to various organizations. The paperwork alone can become a nightmare for new graduates. It also allows students to obtain one payment that is significantly lower than the combined payments they are currently making.
Graduates can choose to consolidate their federal student loans at any time. The most beneficial time to do it is right after graduation, before the payments begin. This is the easiest way to avoid having to make more than one federal payment. You do not have to apply for it right away; however, graduates can apply for it at any time throughout their loans.
Determining Consolidation is Right
Determining consolidation is the right choice is important. Borrowers need to consider how much time is left on their current student loans if they are not consolidating right after graduation. Consolidating student loans means the length of time for repayment will most likely be longer than the current repayment period. This means there will be more interest charges and more years of payments. If the loans are fairly new and the payments are unaffordable, consolidation makes sense.
Students have various payment options when they consolidate their loans. Two of the most popular flexible payment plans include an income contingent payment plan and income-based payment plan.
If borrowers take a job that is considered lower paying, such as those in the public service industry, they might be eligible for the income contingent payment plan. In this plan, the payment is based on the borrower’s income and family size each year. This offers borrowers a payment that adjusts with their income and is affordable for them throughout the term of the loan.
Borrowers who are experiencing a hardship can apply for the income-based Texas student loan payment plan. In this plan, the borrower’s payment is calculated based on 15 percent of the discretionary income. This payment also changes on a yearly basis.