The Basics of Education Consolidation

2007-06-20 15:49:53

( Financial )



College education can be hard on the pocket of both parents and students. The increasing cost of textbooks as well as tuition fees can make your blood reach boiling temperature. This has led to the proliferation of education loans.

While you are pursuing your graduate studies or engaged in foreign studies, you are likely to accumulate considerable debts. Although the payment terms are quite flexible, you will still find yourself unable to settle the debt promptly. Education consolidation is designed to help you keep up with your debt.

Basic Types of Loans

In general, there are two kinds of education loans that you can consider. It will not be a wise move to merge both kinds into a single loan.

The first kind is the federal loan. Here, you can opt for refinancing as it is government-assisted. Likewise, you can consolidate several of this kind of loan into one. On the other hand, a private loan is an unsecured credit which has a higher interest compared to federal loans.

Criteria for Consolidation

With education consolidation, you would have to satisfy the application requirement. The initial criteria is that you should not be enrolled in any school or college during the “grace period” of your education consolidation or you should have made an initial payment. After coordinating with a consolidation firm, you can proceed by asking a company representative to contact your lender. In return, the consolidation agency will negotiate for the reduction of your interest and monthly payments.

Just like other kinds of loan, the resettlement method of your education consolidation will directly affect your future loan applications. Should your loan reach 85% of your total monthly income, it will have a negative effect on your future loans. That is why it is important to make promptly payments. Moreover, if you have a good credit score, some debt consolidation agencies can even recommend you to other debt consolidation programs.

Finally, there is still a risk of fraud when it comes to education consolidation. It is, therefore, important that you deal with a company that has a track record. Otherwise, you could end up paying more than what you can afford.


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