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Student loan consolidation loans
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How good is student loan consolidation The harsh fact, in front of us today, is that the cost of education is much higher to what most people can afford. In order to complete a college degree you need several thousands of dollars which may be unaffordable for many.
Personal financial sources not being enough most families have to look outside for financial help to support to their childrens education. However, the Federal government has been quite considerate and has made available several financial aid programs to support students. These loans, which can be taken up both by the students and by their parents, offer immense convenience to student loan consolidation loans in the perusal of their educational and professional goals. With these provisions, everything goes fine till the final day of graduation and even for the first half of the next six months which are known as grace period. But things take a different turn when the grace period is about to end and the student has to start repaying for all his student loans acquired during his college period. This can build up a lot of tension and also keep the student distracted at his new job. Thankfully, there is a way to come out of this problem and it is commonly referred to as consolidation. Consolidation is a helpful tool with ample benefits tagged along. In the course of this article we will first elaborate upon the process of consolidation and then detail out a bunch of important benefits that consolidation brings along with it.
Student loan consolidation: With the high cost of education, a single student loan consolidation loans may not be adequate to take care of all the costs, making the student pickup several loans from different lenders. And all these loans will come on a different rate of interest and will have different payback plans attached. This can make it very difficult for the student to handle all of these without making any mistakes. And if he does make a mistake it will cost him heavily. Consolidation will involve taking a new bigger loan to pay off all these different loans, and in the process you will get several added benefits. With all his student loans consolidated his responsibilities come down and he needs to concentrate on just one single consolidated loan, which definitely means he has to make just one single monthly payment and that too to a single lender only. Imagine how convenient it can be to make just one payment every month instead of having to write several checks and then ensure that all those checks get deposited before the due dates. Definitely, consolidation offers a lot of convenience to the student in paying back for those numerous loans that he had used to complete his college degree. If youre planning on consolidating your student loan consolidation loans ensure that your outstanding balance is more than $10,000.00 or else you may not be able to realize the completed benefits of consolidation. However, the minimum amount of loan balance that most lenders look for, before consolidation, is $7,500.00. Some amendments have been made, with regards to student loans, by the Federal
government and now it is possible even for students who are still pursuing their college degree to consolidate their educational loans. Before we go on to enlist the benefits, we must mention that student loan consolidation loans may not always be the best solution to handling your student loans, especially so if your student loan has certain special benefits which will disappear once the loan is consolidated with other loans. Also remember that Federal student loans cannot be consolidated with private student loans.
The benefits: 1. Reduction in monthly payments: depending on the type of student loan, the type of consolidation program and the choice of lender, the monthly payments can be substantially decreased to suit the students convenience. Stretching the repayment over a longer term can even make your monthly payments smaller by 50 percent. 2. Easy to handle: with only one monthly payment to make after consolidation of the student loans, life becomes much easier for him. It not only cuts down the burden of writing a number of checks but also makes it easier for the student to organize his payments and his personal finances. 3. Fixed interest rate: the Federal student loans are on a variable rate of interest, but by getting your loans consolidated you can move on to a fixed rate of interest will which will apply on the loan over its complete life. However, that also means that you need to find an offer which gives you the lowest possible interest rate. The calculations of the rate of interest, which will apply on your consolidated loan, are carried out using all the different interest rates that you were paying on your different loans. 4. Extending the term: when the total outstanding balance of all your loans is too high you can look forward to getting your loans consolidated over a longer term to keep the monthly payments within bounds. The maximum term for which the consolidated student loan can be extended is 30 years and in most cases extending over a 30 year term would mean a 60 percent decrease in the monthly payment. However, what you must remember is that stretching out the term of the loan connotes a bigger amount of total interest to be paid over the loan. 5. In school consolidation: consolidating student loans while the student is still in school enables him to lock in the lower rate of interest. To do this the student will have to request his lender to put his loan into the repayment status, although he is not required to start making payments as they automatically get deferred till the time he completes his school. A major problem associated with this is that the student looses his grace period. A possible solution to that would be requesting forbearance. 6. Better interest rates: in some cases a student may have used expensive sources of finance such as credit cards which have a higher interest rates structure, and with consolidation these too get converted to a lower rate of interest which can bring in a lot of savings. Before we close, the only advice is that do a lot of research, compare and evaluate all options before you get your student loans consolidated so was to ensure maximum benefits. Other Articles |
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