Students accumulate numerous loans to secure their college degrees. When the time repayment arrives, their numerous monthly installments with different interest rates per semester causing students to lose their sleep and get diverted from the path of success in their career. Hence, the most desirable thing to do to avoid this kind of situation and opt for a Student Loan Consolidation.
What is Student Loan Consolidation?
- Student Loan Consolidation is basically a loan which absorbs all the previous loans taken by a student to finance his studies and other needs.
- By consolidating all loans a student saves his time and effort as it is much easier to handle one payment monthly than several separate payments. Secondly, a consolidated student loan carries a lower interest rate than the various other student loans.
- Moreover when a student opts for a consolidated loan he has to pay only one interest rate, not several different rates. Also, a consolidated loan offers more flexible repayment options than the other loans. This type of loan is also generally free of any kind of prepayment penalty.
What are the Best types of Student Loan Consolidation Programs?
1. Student Loan Consolidation rates might vary depending upon the student’s financial situation. It will be very easy to acquire an excellent Student Consolidation Loan plan if one has a credit score of more than 660 (FICO score). Different lenders offer different monthly plans according to the student’s loan situation. Some lenders might offer 50% lower monthly plans than others. A student should review the terms and conditions of all the lenders and should select the one who offers simplest repayment options with a monthly payment that will not become a burden for him.
2. While considering consolidation a student should always opt for fixed interest rate rather than floating rate. This reduces the element of uncertainty and clearly defines what one has to repay in future. Hence, one should always choose a lender who is offering the lowest fixed interest rate. One should select the payment period, which does not burden him in any way. This is very significant as the rate of interest and monthly installments are both calculated according to the duration of the loan. Whether the lender will be able to extend the payment period according to the needs of the borrower should also be enquired first. Above all, it is recommended that a student should avoid Student Loan Consolidation if he has already paid a major part of his loans because opting for consolidation on this stage can reset the loan process, which will ultimately make him pay more than what he had planned for.
Keeping these tips in mind a student should first do his homework by carrying out a survey of what the numerous Student Loan Consolidation companies are offering him and then go for the best deal that will make it easier for him both financially and psychologically to get rid of his debt.
Where should I research to find more information on student loan repayments?
You can find out more information on student loan repayment options at StudentLoans.gov or call the Federal Student Aid’s Loan Consolidation Information Call Center at 1-800-557-7392.