With academic expenses shooting through the roof, few high-school students and families can actually afford to pay for normal college education. Student Loan Consolidation is a favorite choice for many people. Other than merging more than one loans, it helps make your monthly payment lesser in amount and more convenient to repay. The payment terms are longer as well. If you find multiple student loans rolling into burdensome debts, consolidation is a great way to deal with the problem. Here are 5 questions asked commonly by students while going for loan consolidation.
What types of loans are eligible for consolidation?
Basically, all kinds of loans qualify for consolidation – whether it comes to Private Loans, Plus Loans or Stafford Loans. However, you should talk to the loan consolidation service to discuss this point.
What is the interest rate to be paid?
A consolidation loan comes with a new interest rate, which is actually a weighted average of all the rates of interest of thee existing loans combined together, and rounded off to the nearest one-eighth of a percentage. The rate of interest depends somewhat on the type of loan that you go for. Stafford Loans, for instance, happen to be low interest rate loans that are taken by students in their own name. No co-signer or credit report review is needed. For Stafford Loans, private lenders offer the funds. The Federal government guarantees and subsidizes these loans. Often, variable rate Stafford loans are transformed to fixed rate loans under the loan consolidation program to yield advantages when variable rates drop to a low point.
Can I defer the loans?
Yes, it is possible. It can be deferred in those cases when you return to school again for some other course. In that case, you will be regarded as a student again. In some cases, such as when students take up some kind of public service career, the loan can be forgiven altogether. This ensures why most families and students find it more convenient to get off their repayment burden with consolidation of loans such as Perkins loans, Graduate PLUS, PLUS and Stafford into just one loan with a single interest rate and payment.
When can I apply?
You can apply for Student Loan Consolidation as soon as you complete school, or after your student loans enter a repayment or grace period. If your family qualifies for federal parent loans or federal student loans, you can obviously qualify for consolidation of student loans. If you happen to have moved past your grace period and are in the repayment phase, you may consolidate your student loans whenever it suits you the best.
Who to opt for – federal or private lenders?
If you qualify for federal consolidation, opt for it by all means. However, if you are not eligible, private lenders can be your best option. If you have taken multiple loans from private sources, private loan consolidation can be a better option to go for. You should look for an experience private lender who specializes in consolidating loans.