The constantly escalating fees as well as the competition in the field of higher education have made the life of a student burdened by debt. Most of the students are financially not capable of bearing the enormous expenses of their college life and as a result of this they have to acquire numerous loans, such as, education loan, credit card loan etc. These loans definitely help them for a while but when the time to pay them back arrives they can become a real nuisance for these students. Their numerous monthly installments and high interest rates can make many students lose their sleep and get distracted from their career path. All these problems and more can be avoided if the help of a Student Loan Consolidation is secured.
The basic idea behind the Student Loan Consolidation is of restructuring the finances of those students who have over their student life accumulated numerous loans and are now finding it difficult to pay them back. It helps them by combining all their previous loans under a single head. A consolidated loan is beneficial for students as compared to various small loans because of various reasons. By consolidating all the loans a student ensures that he has to pay towards a single loan each month. Thus, he becomes answerable to only one creditor which is a very mentally satisfying factor for him. Moreover, he saves his time and effort as it is much easier to handle one payment monthly than several separate payments. Thus, after opting for a student loan consolidation, students can concentrate more on their studies and career rather than thinking about loans. Secondly, a consolidated student loan carries a lower interest rate than the various other student loans. Moreover when a student opts for a consolidated loan he has to pay only one interest rate, not several different rates. Also, a consolidated loan offers more flexible repayment options than the other loans. This type of loan is also generally free of any kind of prepayment penalty.
Another plus point of Student Loan Consolidation is its easy availability. These services can be easily obtained both online and offline. Moreover, the companies offering these services don’t perform extensive credit checks. Also, no collaterals are asked for taking this loan. Some companies even offer rate reductions. For instance, some of them reduce the interest rate by 1% if a student makes all his payments on time for two years. Thus, before opting for a student loan consolidation a student should do his homework and carry out a survey of what all the companies are offering him, to get the best deal.
Hence, Student Loan Consolidation is beneficial for the students in all senses. So, if a student has accumulated loans in excess of $7500, the best way to manage them is by consolidating them. This would free up the cash flow with reduced monthly payments and allow the students to concentrate on their career by being satisfied both financially and psychologically.
By: Mansi Aggarwal
Posts Tagged ‘Consolidated Loan’
5 Basic Questions For Student Loan Consolidation
December 30th, 2009
In the point of view of many people, student loan bills are overwhelming and frustrating, especially when the job market is not stable at the moment. For those unemployed graduates, staring at the monthly repayment amount of each of the student bill is a stressful thing because they are unable to pay the loans without income. The immediate actions they are advised to take are to consolidate all their study loans into one single loan and defer the payment.
If you are like other students who have less information about student loan consolidation program, here are some guides for you when you consult a loan consolidator in the market. There are 5 basic questions you need to ask in order to obtain a better understanding about the program. It is important for you to identify whether this program is beneficial for you or make your credit score worse.
1st Question:
Who is eligible for consolidation?
For students or graduates who have never consolidated their study loans, they are eligible for this program. You can only consolidate loans that are under your name. As a student, you can only consolidate your loans during the grace period of the loans or after the phase of repayment has started. If you are married, you and your spouse are not allowed to combine your loans together.
2nd Question:
Is there any additional cost incurred if I consolidate my study loans?
The process of consolidation is absolutely free. Hence, you are reminded to stay away from those consolidators who charge additional fee to consolidate your loans. In common, many consolidators also waive the prepayment penalties. If you pay back your loan ahead of the schedule, you are not required to pay any penalty.
3rd Question:
What is the new interest rate on your newly consolidated loan?
When you decide to consolidate your student loans, it will only be beneficial if you manage to get a lower interest rate. The most ideal rate for federal consolidated loan is 6% and for private consolidated loan, the best is below 8%.
4th Question:
How long is the duration of my new repayment plan?
If you have a very tight budget, you are suggested to check with the consolidators whether you can extend your repayment term to a longer period. If your student debts are huge, you should look for plan which allows you to extend your repayment up to 25 years.
5th Question:
Who is my lender?
You have the freedom to consolidate your loans with any lender. The key point here is you are advised to look for reliable consolidator in the market who can really help you to reduce your monthly payment and save some money in the long run. Sign up the plan that really suits your financial needs.
By: Jeslyn Jessy
Federal Government Student Loan Consolidation Benefits
December 29th, 2009
Education is today’s biggest requirement besides food and employment for sustaining a decent life. In order to facilitate the employment and shelter needs, it is necessary to be equipped with the power of knowledge. To fulfill the needs of various students who find it difficult to pursue their education program, the US government has come out with the idea of providing students with a consolidated loan named as “federal government student loan consolidation,” which is a combined form of the various loans taken, by a student.
A program that the US government has launched is the Federal government student loan consolidation program that enables students in continuing their graduation and higher study program. With the help of the consolidated loan where the interest rate is nominal as it is meant for the benefit of the students community where parents and guardians cannot invest huge amounts in the education of their wards.
This federal government student loan consolidation can be repaid in easy installments when the student completes his education and is in a position to earn and pay. This saves the student from repaying different lenders at different points in time with different interest rates. The time period chosen by the student for the repayment of the loan can vary from 10 to 30 years. However, the longer the time period you choose, the greater the amount you pay.
Some of the features of Federal government student loan consolidation are:
This loan does not require hefty loan processing fee, and the payments can be made in flexible schedules. The interest rate is a fixed amount, which is the average of the total interest rates of different loans, which is rounded off to the 1/8th of the percentage. Any student who has a history of bad loan payment is still eligible for the consolidated federal loan. There is no minimum loan amount limit.
Thus, this is a premium policy of the federal government student loan consolidation program, which is indeed a student friendly move.
By: Ricky Lim