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Student loan consolidation guide 101
The constantly escalating fees as well as the competition in the field of higher education have made the life of a student burdened by debt. Most of the students are financially not capable of bearing the enormous expenses of their college life and as a result of this they have to acquire numerous loans, such as, education loan, credit card loan etc. These loans definitely help them for a while but when the time to pay them back arrives they can become a real nuisance for these students. Their numerous monthly installments and high interest rates can make many students lose their sleep and get distracted from their career path. All these problems and more can be avoided if the help of a Student Loan Consolidation is secured.
The basic idea behind the Student Loan Consolidation is of restructuring the finances of those students who have over their student life accumulated numerous loans and are now finding it difficult to pay them back. It helps them by combining all their previous loans under a single head. A consolidated loan is beneficial for students as compared to various small loans because of various reasons. By consolidating all the loans a student ensures that he has to pay towards a single loan each month. Thus, he becomes answerable to only one creditor which is a very mentally satisfying factor for him. Moreover, he saves his time and effort as it is much easier to handle one payment monthly than several separate payments. Thus, after opting for a student loan consolidation, students can concentrate more on their studies and career rather than thinking about loans. 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.
Another plus point of Student Loan Consolidation is its easy availability. These services can be easily obtained both online and offline. Moreover, the companies offering these services dont perform extensive credit checks. Also, no collaterals are asked for taking this loan. Some companies even offer rate reductions. For instance, some of them reduce the interest rate by 1% if a student makes all his payments on time for two years. Thus, before opting for a student loan consolidation a student should do his homework and carry out a survey of what all the companies are offering him, to get the best deal.
Hence, Student Loan Consolidation is beneficial for the students in all senses. So, if a student has accumulated loans in excess of $7500, the best way to manage them is by consolidating them. This would free up the cash flow with reduced monthly payments and allow the students to concentrate on their career by being satisfied both financially and psychologically.
Federal Student Loans vs. Private Student Loans (Page 1 of 2)
Few students can afford to pay for college out of their savings, so they use student loans to pay for school. Two major categories of student loans include federal loans and private loans. Because we believe that it is important to understand your education-funding options, this article investigates the difference between federal and private student loans.
These days, there are very few students who can afford to pay for college without some form of education financing. Two-thirds of undergraduate students have some debt, while 88% of law students need to borrow to finance their education. A typical undergraduate may graduate with more than $20,000 of debt, while graduate students may have significantly higher indebtedness. Law school students may graduate with an average of $80,000 in student loans. Typically, students have acquired both federal and private debt, but what are the differences between these types of loans? And is one better than the other? Read on for an explanation of both categories of student loans.
Many students rely on federal student loans to help finance their education. The most common federal loan is a Stafford Loan. These may be issued directly from the government to the student, or they may be issued by a private lender, such as a bank or credit union, belonging to the Federal Family Education Loan Program (FFELP). Either way, these loans are guaranteed against default by the federal government.
Something else to remember about Stafford Loans is they may be subsidized or unsubsidized. If you are eligible for a subsidized Stafford Loan, the government will pay the interest while you are in school. Subsidized Stafford Loans are generally given to students who can demonstrate financial need. If you receive an unsubsidized Stafford Loan, you will be responsible for paying all of the interest, although you may have the payments deferred until after graduation. If you choose to defer paying the interest until after graduation, the interest will be capitalized, or added to the loan amount. To qualify for an unsubsidized Stafford Loan, you do not need to demonstrate financial need.
The amount of your Stafford Loan will vary depending on your year in school. However, graduate students may borrow up to $18,500 each year (with $8,500 being subsidized) with a combined limit for graduate and undergraduate federal loans of $65,500 for dependent students. If you are an independent student, the cumulative limit you may borrow is $138,500 for your graduate and undergraduate studies.
Stafford Loans have variable interest rates, based on the 91-day T-bill, and this interest rate is adjusted each year on July 1. Stafford Loans have an interest rate cap of 8.25%. All lenders offer the same base rate for Stafford loans because the interest rate is predetermined by the government, although many lenders offer payment incentives and/or discounts to help you reduce your interest rate further. Another benefit of federal loans is you may lock in a fixed interest rate if you choose to consolidate your federal student loans. That way, you will not be affected by adjustments in the interest rate each year.