A college education costs a lot of expenses. Using student loans to pay for could cost us a whole lot more. Education is the most important asset for a country so that it can have educated youngsters. It requires lots of educated people to make this country the most developed country. Nowadays government has made many amendments in the education system especially in loans for education. Here I have discussed about student loan.
What is Student Loan Consolidation?
Student Loan consolidation is the process of combining our multiple student loans into a single, bigger loan, with a new lender. There are both benefits and risks to consolidating student loans, which I will discuss in this article. Choosing to consolidate the loans is an individual choice. The right decision will depend on the specifics of your loans that are the types of loans, interest rates, balances, borrower benefits, as well as the current financial situation. There is no hard and fast rule about student loan consolidation. Make sure about the research to get the right option. To make the payments more manageable and maybe even save some money consolidation is a great option. It may end up costing more money in the long run.
Pros of Student Loan Consolidation
Simplicity: Consolidating the student loans can make dealing with them with just one or two monthly payments. If forgetting to make payments and having difficulty in keeping track of all of the different loans. This can keep us organized and help us to avoid missing payments.
Potentially lower payments: Consolidation can potentially lower the total monthly student loan payment. But this depends on the interest rates and of the current loans. This is especially beneficial if we have been struggling to make payments.
Better credit, better rates: If graduation is completed and get a great job, and have been making responsible financial choices of making payments on time, then the credit score may have gone up.
Dodge default: Since it can possibly lower the monthly payment, depending on the loans, loan consolidation can offer a solution. Before being able to consolidate them, though we may be required to get our loans into good standing
Cons of Student Loan Consolidation
Loss of benefits: We may lose certain borrower benefits if we combine the loans depending on the loan. All or a portion of the loan debt can be cleared if we meet certain conditions of flexible or income-based payment options.
Potentially higher rates: We can actually end up paying higher interest rate depending on the current interest rates and loan amounts. This has increased the overall amount, which, we owe. We may end up paying more on the loans than consolidating them.
Longer repayment period: It can lower our initial payment. A consolidation loan can lengthen the duration of the debt. We may end up actually paying more over time.
Beware of variable rates: We may be offered a low but variable interest rate when consolidating the private loans with a private lender. The rate can increase over time your payments.
Do research thoroughly then select the right one that can give you maximum benefits of student loan and less risk.