Students Loan Consolidation

Student Loan Consolidation involves refinancing one or more of your student loans.
Consolidation of student loan is when a borrower takes out a new loan to pay off several smaller student loan. The original balance is paid in full, and a new loan is originated for combined amount, for new term, along with a low fixed interest rate.
Instead of making multiple payments to multiple lender, student loan consolidation is a way to lower monthly payments and simplify finances, where the borrower only has to pay off the new consolidation loan.


Type of Student Loan

We have two type of student loan, we have federal loans and private loans.

Federal Loans:

Federal loan is sponsored by the federal Government. It may be subsidized or unsubsidized.
Subsidized federal loan; to subsidized loans, interest does not accumulate while student are attending school. Government pays your accrued interest.
Unsubsidized federal loan; if unsubsidized, you will be footing the entire bill.

Private Loans:

Private loan may come from state-affiliated, non-profits and through the Colleges themselves.
But with this loan, students typically must have a co-singer (that is someone who helps a student qualify for the loan since they have no credit history or limited income)
Many private loans require payment while a student is still attending school, with variable interest rates, and with very few loan forgiveness options.

Why Consolidating Student Loan

Consolidation loans often reduce the size of your monthly payment by extending the term of your loan beyond 10 years repayment standard with federal loans.
Loan consolidation will not help you if you can afford to make the payment; But if you are having trouble in making your monthly payments or you think that you will in the future.
  • Consolation can prevent several alternatives;
  • Not paying your loans back will cause your credit rating to plummet,
  • And remember, declaring bankruptcy is not an option.
  • Student loans consolidation are immune to bankruptcy.


Care must be taking before embarking on any loan.
Check with your lenders for information on how much your rate with decrease. 
Also you can use student loan consolidation calculator online to check it out.

You may like to read 10 Questions to Ask Before Students Loan Consolidation


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