consolidating student loansConsolidating Student Loans will merge all outstanding loans into a single obligation with one lender and one repayment plan. The individual loans are paid off in full, and the total amount is rolled over into the new loan. Consolidating student loans is an option available to either students or their parents.

A student loan consolidation lets you fix and interest rate that’s usually lower than the original interest rates and reduces your monthly payment. These consolidation loans have flexible repayment alternatives and no charges, fees, or prepayment penalties. What’s more, there are no credit checks or co-signers are required.

Acquiring money for college can be as demanding as pursuing a degree. Student loans, in most cases, provide the needed cash; but upon graduation students have accumulated a huge debt. By consolidating student loans graduates can eliminate much of the pressure.

You must be within the post-graduation six-month grace period, or have already begun repaying your loans. The total of your debt must be a minimum of $7,500, involving more than one lender, and you can not have already consolidated. However, if you have returned to school with additional loans, you may consolidate once again.

The following types of loans can be merged:

  • Direct and Federal PLUS Loans
  • Direct and Federal Consolidation Loans
  • Guaranteed Student Loans
  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • Auxiliary Loans to Assist Students
  • Federal Perkins Loans
  • National Direct Student Loans
  • Federal Insured Student Loans
  • Federal Supplemental Loans for Students
  • Health Education Assistance Loans
  • Health Professions Student Loans
  • Loans for Disadvantaged Students
  • National Defense Student Loans
  • Nursing Student Loans

Make application for a student consolidation loan at the U.S. Department of Education or any bank or credit union that is involved in the Federal Family Education Loan Program. If all of your loans are with a single lender, you must consolidate your loans with that lender. The loan conditions and terms are usually the same, no matter where you apply.

Immediately following college is a time for a fresh start in life. Don’t be overwhelm by debts of the past. Get your finances under control by consolidating student loans, and taking some of the pressure off. When monthly obligations have become too high to manage, debtors often find relief in debt consolidation. Many of these services are readily available in most cities across the country. They offer a break from the stresses of debt – high interest rates, large monthly payments, and the harassment of creditors.

Consolidating student loans is a simple process of converting all current loans and debts into one payment a month. Interest rates on student consolidation loans are much lower than on credit cards, especially if the student is already behind on payments. This means smaller monthly payments that are easier to make, and avoids any further interest or penalties.

If the student is behind on his/her loan payments, the credit score will be low and so the interest rate will be high. Lower interest rates translates into fewer, smaller payments on the student consolidation loan. Many different payments can be reduced to one smaller payment with an appropriate debt consolidation. One payment per month is much easier on the nerves than seven or eleven. This can be a great help to an active person who may lose track of time. One payment is simply easier to remember. In fact, automatic payments can be set up to make the payment for you, “one less thing to worry about”-Forrest Gump.

Another valuable benefit of consolidating student loans is the counseling that is available to help the student better handle his finances. Entertainment expenses, utility bills, and unnecessary spending are examined and pared. This will free up more funds to make the new monthly loan payment, These credit counselors will also have seminars, professional advice, and blogs on budgeting, repayment of debt, wise use of credit cards, and rebuilding credit rating.

When you get a bank loan, it’s usually secured by collateral as in a home equity loan. However, some debt is unsecured, meaning there is nothing guaranteeing the repayment of the loan. Medical bills and credit cards are two examples of unsecured debt, also referred to as bad credit debt.

Bankruptcy can ruin a credit rating. If the student is behind in payments, debt consolidation demonstrates a commitment to repaying the loan. In many cases, debt consolidation companies have an acknowledged relationship with collection agencies, banks, and credit cards. They can often obtain a lower interest rate and a better repayment plan than an individual can get on his own.

Debt solutions differ from a bankruptcy by means of consolidation loans. A person may wish to avoid bankruptcy since it entails the loss of real estate and personal property. Some bankruptcies involve a total liquidation of assets to meet the demands of the debtor’s lenders. Other bankruptcies only call for a rescheduling of the debt. That’s, in affect, what a debt consolidation service does, saving the debtor’s credit rating from the onus of a bankruptcy.

A bankruptcy lingers on a credit report for seven years. It can have an adverse effect on getting a home loan, buying a car,, or even securing a job. Consolidating student loans will not damage credit ratings. Rather, they avert the tardy payments that result in costly late fees and raised interest.

Debt settlement is another form of relief. In this instance, the student repays the debt with one agreed upon payment. Creditors favor this instead of a bankruptcy and are often willing to negotiate. A credit counselor can prepare this type of settlement.

Debt management involves the creditors lowering their minimum payments so the student can continue timely payments. A debt counselor can assist in this type of relief. Once again, reduced payments are better than no payments to the creditor or bank.

Consolidating student loans is an efficient means of reducing payments and creating some latitude in re-establishing satisfactory repayment. Debt consolidation services abound online, and it’s in the student’s best interest to research any such service before deciding. A good track record is a reliable indication of the company’s honesty and ability. A debt management company with complaints or poor reviews should be avoided.

Spiraling debt is tough to escape. Consolidating student loans offers an accepted means to rebuilding credit ratings, lowering payments, and freeing up spending cash. When faced with the threat of frozen credit cards, ever-increasing interest rates, garnished wages, or damaged credit, student loan consolidation is a very effective measure.

Back to the top of Consolidating Student Loans.