Managing Student Debt
By: echo_promotions | Posted: 24th July 2007
What does it mean to consolidate?
Giving all your loans to a company which then charges you 1 monthly rate is called consolidation. One of the many benefits of this is obtaining a smaller monthly fee.
Other Benefits:
Getting a lower interest rate is only one of the benefits of consolidating. The following are a couple more of them:
-Only one payment a month: Instead of writing multiple checks to all your lenders, consolidation makes it possible for you to write only one check.
-Spend less: You can reduce your monthly payment.
-Obtain higher credit: Once you choose to consolidate, your new lender pays off all your previous debts and merge them to produce 1 new one. Since your previous debts got paid off, your credit history looks better.
-Lock in your rate: When you consolidate your interest rate is locked in. This protects you from future increases.
Consolidation loans are great because obtaining them is so easy. You don't need to be employed or have collateral or a cosigner to consolidate your loans. They don't even cast a glance at your credit score!
Disadvantages of Consolidating:
There are usually disadvantages to every decision. Explore the ups and downs of consolidation before you join your loans. The following is a list of some drawbacks to consider:
-Occasionally interest rates will plummet. If you chose to consolidate, your higher rate will be locked in.
-Once you consolidate you can't unconsolidate.
-New terms: Your new consolidation loan will have different terms than your old loans did.
-More interest: Extending the repayment period of the loan will result in you paying more interest.
You know the pros and cons of student loan consolidation, you ought to know whether or not you are eligible for one of these loans. To qualify for federal student loan consolidation, there are a few requirements. You must have more than $10,000 in outstanding federal student loans. You must be graduated as well. Lastly, any defaulted federal student loans must be repaired before consolidating them.
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To learn more about Student Loan Consolidation visit our Student Loan Consolidation page. Being a college student herself, Elise Fisher enjoys writing articles to help college students learn more About-Student-Loans.com.
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