College Loan Consolidation – When Loans Become a Burden

2007-03-08 10:33:40

( Financial )



Many students in need of financial help rely on student loans in order to get a college degree. Sadly, this leads to huge debt that burden student borrowers even after graduation.

If you are one of the many in this situation who are dealing with multiple loans and multiple monthly payments, a college loan consolidation may be just what you need.

A college loan consolidation is as simple as combining all your existing loans from different lenders into a single loan. It is a lot similar to other refinancing solutions or debt consolidation loans where the main concept is to reduce multiple loans into one. Your loan consolidation lender will pay off the balances of your existing loans and you then make payments to your new lender.

From having multiple bills to pay each month you now have only one monthly loan payment to make, which is less stressful. In addition, school loan consolidation generally offers lower interest rate and lower monthly payments. You have to be certain, though, that the interest rate on your consolidated loan is actually lower than the current student loan rate that you are paying. Otherwise, it will be pointless to get a college loan consolidation if you will only end up paying more.

A college loan consolidation offers several choices when it comes to repayment plans. A standard loan consolidation gives a maximum of 10 years for the borrower to pay back the loan. Other plans can have repayments terms up to 30 years. Generally, lenders do not charge fees and there are no prepayment penalties. You can also find lenders who will not perform credit checks or require loan collaterals and co-signers.

A college loan consolidation can lower your payments by 50 to 60 percent. To find out if consolidating your loan will indeed save you money, calculate the total amount of the consolidated loan and compare it with the total amount of your current unconsolidated college loans. This, of course, will depend on interest rates and loan terms.

Take the time to find out if a college loan consolidation is right for you. Research online or consult a financial counselor to learn more about this option. A suitable college loan consolidation can help you fix credit problems and save money


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