Student loan consolidation guide

The students have two options to pay for the college expenses. Either they ask their parents to pay the college fees and all the expenses, or they can go for a student loan. Mostly the student loan is preferred because not all the parents have thousands of dollars in their savings account. Thus when one opts for a student loan, he has got various options to choose from. The loan can be taken from a private lender such as bank or financial institutions or a Federal Student loan which is a government loan.

Why to go for consolidation?

A consolidation or combining of different loans into one makes it easier for the borrower to repay the amount. Moreover, the options like changing the repayment schedule and change in the instalments is available only when there is a consolidation of loans. One loan amount to repay and one interest rate for the whole amount makes it a lot more simple and beneficial for the borrower to repay the loan and make himself debt free. It is obvious that if the change in the repayment schedule is made than if the loan repayment instalments are made longer than the interest factor in it will also increase.

Different loans consolidation:

Different loans taken by an individual can be consolidated into one loan with a single repayment for all the loans and their interest. But there is a condition to this consolidation. Different Federal loans can be merged into one loan, or different private loans can be merged into a single loan but, it must be noted that the consolidation of federal loan with a private loan is not possible. One more constraint in a private loan consolidation is that you should not be in default at any point of time or else you get disqualified for loan consolidation. The Federal loans that can be consolidated amongst themselves are;

1) Direct subsidized loans
2) Direct unsubsidized loans
3) Subsidized Federal Stafford Loans
4) Unsubsidized Federal Stafford Loans
5) Direct Plus Loans
6) Plus Loans from the FFELP
7) Supplemental loans for the students
8) Federal Parkins Loans
9) Federal Nursing Loans
10) Health education assistance loans
11) Some of the existing consolidation loans

The consolidation of these loans is possible only after graduation, leaving the school or a drop below the half time enrolment.

Whether to go for consolidation?

Whether to go for consolidation or not is entirely dependent upon person to person. The consolidation helps in creating a single pool of all the loans and thus makes things less complex for the borrower. But, the consolidated loan's policy and agreements override the old loan's policy and terms. So, one must make sure whether the old loan's terms were favourable or the new consolidated loan's terms are better. Besides, making a single loan out of many loans may increase the repayment time of the total amount. This makes the borrower to shell out a little more in the name of interest. So, it is better to do the calculations before jumping directly into consolidation.

Student loan consolidation has brought a great relief for the students but it has also got to some factors like the interest which might be a little costly for the borrower.

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