Student Loan Consolidation – Why Consolidate Your Loans

2007-03-08 10:33:40

( Financial )



Most students who need financial help to further their education take out student loans. Unfortunately, these students often graduate with a heavy load of debt. For many student borrowers burdened with making more than one loan repayment each month, a student loan consolidation is one solution.

A student loan consolidation merges all your student loans into a single loan where you have only one lender, one interest rate and one repayment term. When you get a student loan consolidation, the lender pays off the balances of your existing student loans. You then make payments to the loan consolidation lender.

Why should you consolidate student loans?

By consolidating student loans, you will have lower monthly payments and only one monthly bill to pay. This is very helpful for students who cannot keep track of multiple bills or find it difficult making the payments.

Usually, the interest rate is lower on a loan consolidation. In addition, student loan consolidation offers fixed interest rates so you can lock in a low rate for the entire term of your loan. You can use an online loan calculator to find out the interest rate for your consolidated loan. If it has a lower interest rate than your current student loans, a loan consolidation is a good option for you.

Student loan consolidation also offers flexible repayment options with terms up to 30 years. There are lenders who give rate discounts for timely payments or for payments directly debited from the borrower’s account. Usually, there are no prepayment penalties, credit reviews and co-signers required.

You can get a student loan consolidation through:
1.Your current lender (if your current loans are from one lender)
2.Banks and credit unions that are part of the Federal Family Education Loan Program
3.U.S. Department of Education

You can get a student loan consolidation during the six-month grace period or after you have begun making payments. Typically, the process of consolidating takes 30 up to 45 days.


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