Organize Your Finances Through Student Loan Consolidation

Organize Your Finances Through Student Loan Consolidation


Before you decide to opt for a student loan consolidation program, let us try to understand the types of Student Loans available.
Federal Loans
This loan is sanctioned by the U.S. education authorities and is usually approved easily. Here are the different types of Federal loans that are eligible for student debt consolidation. However, they can be widely categorized under
Federal Perkins Loans

Stafford Loans

PLUS Loans
Features
Federal Loans are tax deductible thereby giving you the advantage of increased cash in hand.

These loans offer the facility of deferred payments incase you decide to become a student again.

Federal Loans “might” be excused in extraordinary circumstances.

Federal loans come with a guarantee or reliability of the US government.
Private Loans
Private loans are those that are offered by private banking institutions or specialized student loan consolidation companies for the purpose of education. The interest rates are high. It is advised that students refrain from taking these loans unless necessary. Credit history plays an important role here. If the student or his family has a poor credit rating score, the chances of getting a good deal are slim. Moreover, the interest rates and the fees are very high. In some cases 10 times higher than that charged by the Federal loan providers! Besides, unlike the federal loans, in private student loans, you will not get any tax relief.
Criteria for Student Debt Consolidation
Not every loan is eligible for federal loan consolidation. Here are some of the main criteria for eligibility
The borrower must be out of school or college

The federal loan repayment must have started or be in its grace period.

The consolidated loan amount should ideally be above ,000.
Advantages of Federal Loan Consolidation
Always remember to keep federal and private loans separate. Consolidate all federal loans into one program and all the private loans into another. The main advantage of student federal loan consolidation is,
Multiple loans are being merged into one.

You are free from keeping a track of all the due dates and the corresponding installments.

The consolidated monthly payment is considerably less than that what you would have paid otherwise. In some cases, you can save up to 45%!

You get to show an improved credit rating as you have just one loan and one creditor to take care of.

On choosing the best student debt consolidation program, you are paying less every month. You have more cash at your disposal

You can stretch the repayment over a period of 30 years!
Whatever may be your choice, student loan consolidation or individual payments, always remember that committing to a loan is a serious matter. Only take what you can give back!