Consolidate School Loans: Freezing the Interest Rates

2007-03-08 10:33:40

( Financial )



INDEBTED SOCIETY

Our society thrives on a borrower-lender system wherein banks and lending companies provide funds for businesses and private citizens. In turn these borrowers pay the lending institutions an interest where their main source of income comes from. It is symbiotic system where both parties derive benefit from one another.

When you are burdened by loans of one type or another, you can decide to consolidate debt. To consolidate debt is to take out one new loan for the purpose of paying off the previous outstanding borrowings and contend only with one simple payment terms. You may avail of this service from the same company wherein you have the debts or get from a totally different lending institution.

Similarly, to consolidate school loans is to take out another loan to pay in one single sweep all your existing student debts. To consolidate school loans is to actually have a financial institution buy off and close your loans, or by the Department of Education if you have federal college loans.

LOCKED LOANS

To consolidate school loans is different from your ordinary debt consolidation in the sense that to consolidate school loans does not necessarily mean that the loan rates will change. To consolidate school loans is to freeze or lock the existing student loan interest rates to protect yourself from fluctuations which can mean higher payments on your part.

If you consolidate school loans your outstanding loans which may have different interest rates will be averaged and you will pay a fixed interest rate throughout the loan’s term. This interest rate will remain unchanged regardless of the fluctuations in the market.

Companies providing school consolidation programs do not charge processing, service, and other fees. Their main source of income is the subsidies that the federal government gives to them in return for services they have rendered.


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