Student Loan Consolidation Options
Getting a college education is very expensive. For many, student loans are taken out to pay for the tuition and other expenses required getting a degree. Graduates are faced with multiple loan payments, some with high interest rates. In an effort to ease the burden, many seek student loan consolidation which merges all loans into one. This creates one monthly payment instead of several. It also can reduce the rate being paid on the loans. There are two options for consolidation, the federal government or finding a private institution that does it.
The eligibility requirements for a student loan consolidation from the federal government are few. A person wishing to consolidate must have at least one Federal Direct Loan or one Federal Family Education Loan in order to use the government program. Consolidation is not allowed for students still in school or loans that are in default. There are, however, certain criteria that when met will allow loans in default to be consolidated. Consolidating with the federal government gives the borrower one monthly payment and four payment options. There are no fees or restrictions and does not require the borrower to be employed or have collateral.
There are both positive and negative factors in getting a student loan consolidation from a private institution. The loans will be consolidated with one lender resulting in one payment per month. What rate the loan will have is dependent on the borrower’s credit score, meaning the rate may increase if the score has gone down. A better rate will lower the payment. Unlike federal consolidation, ones from private institutions have loan origination fees. Also, private loans are not forgiven if the borrower dies while still paying on the debt.
With the cost of higher education these days, acquiring student loans is almost unavoidable. No matter which student loan consolidation option a borrower chooses, they should fully consider the ramifications of each. The benefits of consolidation both to recent graduates and those who have been out of school for some time should be weighted against any fees, higher rates and longer pay-off periods to ascertain which the best option is.
Consolidate your College Loan
When you know how loan consolidation works, then you are able to save thousands of dollars annually – the money you could employ to acquire books and some other materials for helping you go through college.
College Loan consolidation works to ease your collage loans as well as lower your payment dues monthly. In case you have about $20,000 loan and you pay roughly $209 per month at 4.5 percent in interest, for example, you will need to disburse about $130 after college loan consolidation. It means you can save approximately $80 per month, or a thousand dollars annually! When you own a $40,000 loan disbursed in the same rate of interest, you would pay almost $420 each month without any consolidation. You can slash the fee to half – about $230 – in case you consolidate in a wise way. It will help you save about $2,000 each year!
In fact, consolidation is much simpler than you may think. Loan lenders merge the federal loans you currently have and pay the it’s outstanding balances fully. The lender becomes your one creditor. It simplifies your payment processes, as you have to pay only one lender plus deal with one rate of interest.
More than the rates of interest and terms, it is the quality of lender’s student help that you need to examine. The lender’s customer representatives must be capable to clarify the consolidation process for you to understand – no confusing conditions or financial jargon. They must supply you with a counseling to guarantee your college loans will be consolidated to affect your finances.
