What You Need to Know About Private Student Loan Consolidation
For students who are in colleges or universities
, many cannot avoid having student loans to support their studies. Many students are not qualified to receive central government financial aid to support their fees for higher education and "private student loans" are always the easier solutions. Like any loans, student loan is a kind of debt which has the interest. How can the students pay back their student loans during economy crisis? And the answer is consolidating their multiple private student loans to relieve the financial burden.
Is the private student loan consolidation good? Of course yes, because it is combining all previous student loans into one manageable loan to make it easier for the students to pay the debts. When your loans are consolidated, you don't need to pay multiple loans every month. You only have a single loan to pay and this makes it less confusing and troublesome.
Another reason why the
private student loan consolidation is appealing is that it can considerably reduce your monthly payment and lower interest rate. It also presents students a fixed monthly interest that is usually lower than the interest rates of their previous loans, because interest rates these days are decreasing. It can easily help you to reduce your monthly payments up to 50% depending on the interest rates, so you can pay less interest cost and save more money.
In addition, typically the consolidation extends repayment period and gives the students more time to pay their debts. This also helps students lower the monthly payment because of longer repayment term of their loans. This is very good thing so that the students will not feel pressured to make monthly payment on time.
Lastly, when obtaining the
debt consolidation loan, students usually get better offers. For instance, they may be able to receive no prepayment penalties, so all payments in excess of scheduled payments go directly to principal. This way, the consolidated loan can be paid off early without repercussion.
At the same time as the private student loan consolidation gives also a lot of advantages, and there is also a negative side to it. For instance, if you decide to consolidate your loans and extend the repayment period, it will result in an "increases in general total amount paid" although it will lower your monthly payments. In addition, the interest rate of the consolidation loan is based on one's credit history, so it can result in an even higher interest rate than the previous loans. And students may have to pay costly fees (as much as 5 percent of the loan amount) for obtaining such loan consolidation from some lenders. Therefore one should consider all the pros and cons and shop around carefully.
What You Need to Know About Private Student Loan Consolidation
By: Wilson Snyder
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