Repayment Schemes For A Student Loan Consolodation

2007-03-08 10:33:40

( Financial )



A student loan consolodation, also known as a college loan consolidation, provides you with the convenience of combining all of your student loans into a single loan whose monthly payments are made lower due to the longer repayment period that can be granted. On the other hand, a student loan consolidation results in a higher interest rate because the repayment period is stretched over a longer period.

You may apply for a student loan consolodation as many times as you wish as long as you have a new student loan to add.

The repayment of a student loan consolidation normally starts after a certain number of months from the time the loan is released or granted. There are different methods for which a student loan consolidation can be repaid.

Some lenders will offer you a straightforward option of paying the same amount each month including the interest. This option normally has the lowest interest rate of all repayment methods.

A graduated repayment scheme will allow you to pay a low monthly payment for a certain number of months; as the months pass, the amounts you pay will gradually increase. The interest charged here is higher than the straightforward monthly payment plan. Some companies offer a slight deviation from the graduated repayment scheme; however, it is best to check with the lender of your choice.

Another way of repaying the consolidated student loan is to base it on your monthly salary and the amount of the student consolidation loan. Because it is known that your salary increases each year, an evaluation of the repayment scheme is also made to determine the monthly payments for the following year.

Finally, an extended repayment plan, which is not always available to all student loan consolodations (certain criteria apply), allows you to repay within a considerably long period of time; however, the loan amount becomes much higher.

A student loan consolidation payment can be deferred or delayed provided the borrower is a good payer. Deferment can usually be granted if you have had trouble in repaying due to valid reasons, have been unemployed for a certain period, or have enrolled in a training program, a graduate course, a training program for the disabled, or a part time degree or certification program.

Forbearance can be allowed to temporarily delay or to further extend your loan payments. Forberance can be granted if you participate in a medical residency program, or when your monthly payments are equal or exceed a certain amount of your salary. Forbearance can only be granted for a certain period of time. You should note that although your loan payment can be temporarily suspended due to a deferment or forbearance, you will still need to pay the monthly interest.

If you are interested in a student loan consolidation, it is strongly advised that you check with the lender of your choice as to the interest rates and repayment schemes available.


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