Consolidate Student Loans – Ease the Load of Student Loans

2007-03-08 10:33:40

( Financial )



Students or graduates with multiple student loans deal with different interest rates and repayment terms. Because of this, putting finances in order can be challenging. For many students, the debt incurred throughout college becomes a heavy burden they have to carry long after graduation. These are some of the reasons many students consolidate student loans.

Student loan consolidation is a simple concept. To consolidate means to combine. When you consolidate student loans, you simply take all of a student’s existing student loans and combine them into one loan. Instead of having multiple bills to pay every month, you now have only one. You make your monthly payment to the loan consolidation lender. You can consolidate private student loans and federal student loans.

A federal student loan consolidation offers fixed interest rates to student, which can be as low as 4.75 percent. The interest rate on a private student loan consolidation may vary depending on the lender, and other factors. Many students consolidate student loans in order to lock in a low rate should rates increase in the future.

On a student loan consolidation, borrowers may request for an extension of payments to as long as 30 years, depending on the loan balance. The same interest rate will apply but the student will have more time to pay back the loan. This results in lower monthly payments but higher total interest costs. Take a careful look at your finances to determine if you have to extend payment.

Some student loan consolidation programs also offer options in postponement of payments that students can take advantage of such as deferment and forbearance. Usually, you are required to pay only the interest during these periods. You can also apply for cancellation of the entire loan or a portion of the loan. Usually, those who qualify for this option are borrowers engaged in eligible service such as healthcare, community service, law-enforcement, etcetera.

A student loan consolidation offers many benefits to students struggling with their loans. Research different loan programs or consult with a financial counselor in your school to learn more how consolidation can help you.


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