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Student Loan Consolidation

Student Loan Consolidation
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Students can combine several federal loans into one new loan with certain advantages. Private student loans can also be consolidated. Many students and parents have multiple student loans which are paid at different times and they have to remember each due date and the amount to be repaid. There are times when the due date is missed affecting the credit rating and the interest rate. The repayments may be to different lenders. When the loans are consolidated into one the repayment is manageable. Student loans are also consolidated when the deferment options have been exhausted.

Consolidated Federal Student loans:  Federal student loans can be consolidated into one new loan with advantages. The students can combine Stafford Loans, Federal Perkin Loans and PLUS Loans into one new loan.

- the new loan has a lower fixed interest rate 
- lower monthly repayments
- there is only one monthly repayment
- repayment is made over a longer repayment period
- the repayment per month is lower than the total of previous repayments
- the loan has flexible repayment options which vary from 10-30 years

When the loan is paid over the longer period the interest will be more than when it is repaid within a shorter period. The current standard repayment period for Stafford Loans is 10 years, when consolidated to 30 years the monthly repayments are lower. A student can pay the lower amount until he establishes himself or until finances improve. Then the student can increase the repayment amounts. The grace period for federal student loans is 6 months. When the loan is consolidated the interest rate is lower because it is calculated as a weighted-average of all the loans. The student can also tie variable interest rates to a fixed rate so that the rate will not be changed in the future. Parents can consolidate their PLUS loans into one to take advantage of the benefits associated with such a move. There are many repayment options and the students can choose what suits them best depending on their financial position. The student can move from one repayment option to another when circumstances change.

Private Consolidated Student Loans: Private student loans are different and the lenders’ terms and conditions vary from one lender to another. Private student loans can be consolidated into one loan. There are advantages to consider. These include-:

- combining loans from different lenders into one makes the loan manageable
- lower monthly repayment amounts since the repayment period is prolonged
- variable interest rate loans can be consolidated with fixed interest loans weighing the rate down
- there are discounts for those who pay in time and for those which the lender deducts the repayment from the bank account.

By consolidating loans with no discounts with those with discounts, the student can save money.

The consolidation can be done on phone, in person or online. Many people prefer online consolidation because it is convenient. There are many websites which offer consolidation services.    

Last modified onTuesday, 02 April 2013 15:53
More in this category: « Student Aid Private Loans »

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