Federal Student Loan Consolidation

2007-03-08 10:33:40

( Financial )



The United States government has helped a lot of students in seeking college education through financial aid. Almost all of the students in America apply for a federal student loan because the government pays for the interest that is incurred during your stay in college.

Federal student loan is open to everyone who wishes to apply for a college loan. Although the American government exudes equality rights, certain criteria put a boundary to whom the loan is granted to. Federal loans are mostly granted to students coming from a low income family. Students who do not qualify for federal loans are redirected to apply for another type of college student loan.

Repaying of your loans is one of the hardest things to do after graduation. This is the time that you gradually pay your college debts off, along with the piled up interest rates. Federal student loan consolidation answers all of your problems regarding high interest rates piled above your college loans. Federal student loan consolidation locks your interest rate until you finish paying off your debts incurred from college. You also have an option to choose a longer repayment period compared to simply having a student loan.

Federal student loan consolidation gives you a lot of benefits as well as disadvantages. Student loan consolidation rates are usually lower than normal unconsolidated loans. This allows you to extend your payment scheme over a longer period of time and spend your money on more important things. You are also given the chance to merge all of your student loans into one account and have convenience in paying for one account per month. This makes you save time and effort rather than paying for several college debts in different places.

Contrarily, federal student loan consolidation does not provide you with a grace period that is usually available with unconsolidated loans. Once your application is approved, you have to start repaying immediately. Another fact that is usually not known by many is the disadvantage that you may encounter when interest rates go down. When you apply for a federal student loan consolidation, the current interest rate is locked in your consolidated loan. In some cases, interest rates fluctuate and go down. When this happens, you cannot take advantage of the lower interest rate because you have applied for a consolidated loan that locks in your interest rate. You also end up paying more fees incurred from interest rates because you pay your college debts over a longer period of time.

All in all, federal student loan consolidation gives you more time to earn money and repay your debts incurred from college.


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