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College Loan Consolidation – Advantages and Disadvantages
College tuition is on the rise and students and parents alike are seeking additional methods to help pay for the soaring costs. Student loans, grants, scholarships and work-study are common ways to supplement or completely pay for the cost of college.
Student loans are probably the most popular of financial aid sources. It’s quite usual for a single student to take out multiple loans to cover the many expenses of a college education – tuition, transportation, dorm, books, etc.
At the end of a college student’s career, they often find themselves facing a hefty sum of financial payments which start after a six to nine month grace period post graduation.
Many students turn to College Loan Consolidation to reduce the stress of multiple, high payments, opting for the lower payments and extended terms of a student consolidation loan. While there are advantages to student loan consolidation, students should fully research and analyze all of the aspects of loan consolidation.
College Loan Consolidation – Federal vs Private
Federal loans are more popular than private loans for a few reasons. Federal loans have lower and fixed interest rates and additional benefits such as grace periods. Private loans usually have higher interest rates, and no grace periods.
When consolidating, keep the types of loans separate in order to retain the benefits of the Federal loans. Federal loans provide a cap on the interest rate, along with fixed interest rates.
College Loan Consolidation – Advantages and Disadvantages
It is important to consider both the advantages and disadvantages before applying for a student consolidation loan.
Advantages include:
A lower monthly re-payment amount
Lower interest rate, which may save you money in the long run
Organization of loans – make a single monthly payment
Disadvantages include:
Possibly paying more money over the life of the loan
Most likely paying on the loan for a longer amount of time – 10 to 30 years
There are few options to consolidate this loan later
If you decide that college student loan consolidation is for you, start by conducting extensive research. Begin with federal student loan consolidation programs such as Federal Family Education Loan Program and Direct Loan Consolidation. They offer fixed interest rates capped at 8.50%. There are also other free resources to help you choose. It is important to shop around and gather as much information as possible in order to make the best decision.
For private student loan consolidation, inquire with various lenders both offline and online. Many times, online vendors provide a lower interest rate and quick approval times.
Perform exhaustive research until you are completely comfortable making a decision, as this decision will make quite an impact on your financial future for a number of years.
Unsecured loans on a rise
Research conducted by a leading comparison website states that women in UK are getting increasingly dependant on unsecured loans for their shopping and other living expenditures. Since the unsecured loans don’t call for any security to be pledged to the lender, the women in UK make their best use to fund their requirements. The research further states that the trend of women who opt for unsecured loans is because of the easy accessibility of unsecured personal loans.
The role of the online media can’t be underestimated in this. Most of the high-street banks have stringent policies for granting unsecured loans. However, online and private lenders grant unsecured loans even to those who have bad credit records. The rate of interest charged is very high, going up to 42% annually. But when needs are urgent and there is no other way of procuring money, online and private lenders are the only alternatives left to the borrowers.
Unsecured loans taken from online media can fetch you the advantages cited below
- Easy accessibility- The online media is the next big revolution in the field of mass communication. People can easily access the Internet sitting at home, and apply to varied lenders for unsecured loans with convenience, ease and comfort.
- Time and effort-saving – In case of online media, the borrowers don’t have to visit every bank to hunt for loans. It takes a fraction of seconds to apply for unsecured personal loans. One can apply to a lot of lenders at the same time, and see various loan products at a glance.
- Comparison tools The online media offers various comparison tools that can help you find the loan quotes of various loan deals, and thereby compare the best deal for yourself.
- Free online credit reports- Many online sites such as experian, checkmyfile etc. offer free online credit reports. With the help of these, the borrowers can analyse their credit score and that too for free.
So, online loans are the in style way of borrowing money. Opt for unsecured loans by applying online, if you don’t have the time to visit different lending institutions.