STUDENT LOAN CONSOLIDATION SIMPLIFIES LOAN REPAYMENTS

2007-03-08 10:33:40

( Financial )



Students and their parents who have multiple borrowings for educational expenses can simplify their loan repayments through student loan consolidation. It is designed to combine repayments of several outstanding loans into one repayment. The new loan executes an entirely new loan documents, new interest rate and charges, and new repayment schedule.

Student loan consolidation is offered to several federal student loan programs. The interest rate charge is fixed throughout the period of loan repayments. It is better to avail of student loan consolidation when variable interest rates are low. It will be more beneficial because you are paying lower interest rate for the consolidated loan compared to the interest rates you are paying on your outstanding loans.

Student loan consolidation extends the period of loan repayments. It makes your monthly repayments more affordable. The extended period of repayments will actually cost you more in the long run since you are paying more interest on your loan. It’s the way lenders profit from consolidation of loans aside from other application fees.

Easier and simplified repayments are the interim benefits you get from student loan consolidation. Borrowers would rather bear the higher cost of its repayments as long as they are not having difficulty paying the monthly repayments.

Meeting monthly repayments in the interim is important to maintain good credit record. It impacts on your ability to access financing in the future. Thus, borrowers bear paying more money on student loan consolidation than face the consequences of defaulting on their loans.

Student loan consolidation is usually recommended by credit counsellors as a last option to take in managing financial debt. Its higher cost is considered to work against the borrower in the end. Thus, they promote to manage your debt efficiently than adding on your debt. Observing prudence in taking out student loans is advised to student borrowers.


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