Student Loan Consolidation, Risks and Benefits. First of all, If you are a student with several debts on your shoulder and you want solution to it. Then my dear friend you have landed at the right place. This article is for every Student whether you are in high school, graduate or undergraduate. We are here to make your problems much easier for you.
Student Loan Consolidation, Risks and Benefits
What is Student Loan Consolidation ?
Remind above paragraph, i talked about multiple loans and debts. Yes, that’s what consolidation actually means, it allows you to combine multiple student education loans into a single direct consolidation loan.
Types of Student Loan Consolidation
There are two types of student loan Consolidation:-
- Federal Student Loan Consolidation:- It is direct consolidation loan through the Department of Education. It lowers your payments by extending them but it won’t lower your interest rate. Another, Private Student loans are not eligible for a Direct Consolidation Loan and Federal Student loans are only eligible for a Direct Loan Consolidation.
- Private Student Loan Consolidation:- It is also known as Student Loan Refinancing. It is Loan Refinancing through the private lender. In this you can save money by getting lower interest rates. In Student Loan Refinancing you are eligible for both federal and private Student loans. With Student Loan Refinance, one or all existing student loans are combined into single student loan. As a result, the new student loan is a private Student loan.
In contrast, we will talk about only Student Loan Consolidation, as it is very prominent in whole world today.
Consolidating Student Loans is a good way to ease the burden of multiple loans by converting them into a single manageable loan.
Some major types of Federal Student Loans are:-
- Direct Consolidation Loans
- Family Education Loans
- Direct Subsidized Stafford
- Federal Direct Unsubsidized Stafford
- Direct PLUS Loans
Interest Rates in Student Loan Consolidation
Student Loan Consolidation does not decrease your interest rate. Ut just simplifies your federal student loans and combines them into a direct Consolidation loan.
Repayment in Student Loan Consolidation
Above all, Federal Student loan Consolidation offers 10 years as standard repayment term. You can also extend your repayment term to 20 to 25 years by income-driven repayment plans such as PAYE and REPAYE.
Benefits of Student Loan Consolidation
Most noteworthy, One of the best benefits of Loan Consolidation is that it gives you a set payment. Other benefit is that if you choose a good Consolidation loan with solid terms you can also get a set if interest rate profits.
Risks of Loan Consolidation
Loan Consolidation will often lead you to loose little bit extra income and even clear up your credit card balances. However, this does not mean that it is not a good idea. So, It is necessary to look at your financial behaviors carefully before you get into it.
Finally, the conclusion is student loan consolidation have some risks but they are equal to negligible as its has more benefits that it. So, according to our opinion you should go for loan consolidation if your facing problems under multiple student loans.
ALSO CHECK:- Consolidate Graduate Student Loans