If
you have availed few student loans to fund your college education and
you are not being able to keep tab on the same, it could not just drain
you of all your energy but you could also fall behind on payments as it
will be difficult to track your loan repayment schedule. However, there
is definitely an answer to this and that is by consolidating the
student loans that you have availed.
In
this article, let us find out how you can go about consolidating these
loans so that your financial habits get positively recorded in your
credit report and you earn a good credit score in due course.
this article, let us find out how you can go about consolidating these
loans so that your financial habits get positively recorded in your
credit report and you earn a good credit score in due course.
Important factors to consider before consolidating student loans
In
the paragraphs that follow, let us find out the essential aspects that
you must take into account prior to taking the plunge. However,
remember, the same solution will not apply to all students and you need
to customize your solutions depending on your requirement.
- The amount you owe
The
outstanding amount that you owe is not just about the balance. Over the years, the loans have attracted different rates of interest, the type of loans, and the date on which it was disbursed.
outstanding amount that you owe is not just about the balance. Over the years, the loans have attracted different rates of interest, the type of loans, and the date on which it was disbursed.
Since
the rates of interest varied on these loans at different points of time, it is essential that you calculate the final amount. You can get the necessary details from the National Student Loan Data System.
the rates of interest varied on these loans at different points of time, it is essential that you calculate the final amount. You can get the necessary details from the National Student Loan Data System.
The
interest rate is usually the average of all loans taken together in
case of consolidation of student loans. Aside from this, you are also
required to know whether the loan that you availed is through a private
lender or federal government.
interest rate is usually the average of all loans taken together in
case of consolidation of student loans. Aside from this, you are also
required to know whether the loan that you availed is through a private
lender or federal government.
- Are savings guaranteed?
An
important aspect that you must remember is that consolidating does not
always means that you will be able to save. If you are able to keep
track of the individual loan accounts, it is best in your interest not
to consolidate the loans.
important aspect that you must remember is that consolidating does not
always means that you will be able to save. If you are able to keep
track of the individual loan accounts, it is best in your interest not
to consolidate the loans.
It
is undoubtedly an advantage because after consolidation, you have to pay the debt amount to only one creditor and that itself reduces your hassle to a great extent. However, in the long run, you end up paying a
lot more. Why is this so? This is because consolidating not just means that you are collating all loans, it also means that you will have to
pay more over a longer period of time. However, if you want to explore
other avenues of debt repayment, you can go through the information on
is undoubtedly an advantage because after consolidation, you have to pay the debt amount to only one creditor and that itself reduces your hassle to a great extent. However, in the long run, you end up paying a
lot more. Why is this so? This is because consolidating not just means that you are collating all loans, it also means that you will have to
pay more over a longer period of time. However, if you want to explore
other avenues of debt repayment, you can go through the information on
Alternatively,
you could also opt for an income-based repayment method. It may be
mentioned here that once you opt for consolidation, you can avail
repayment plans that are of varied types and the terms can range between
10 years and 30 years. Longer repayment term means lower monthly payments.
you could also opt for an income-based repayment method. It may be
mentioned here that once you opt for consolidation, you can avail
repayment plans that are of varied types and the terms can range between
10 years and 30 years. Longer repayment term means lower monthly payments.
Benefits of student loan consolidation
Having
said about the important factors that you need to consider prior to
consolidating student loans, let us briefly go through the benefits-
said about the important factors that you need to consider prior to
consolidating student loans, let us briefly go through the benefits-
- Automatic debit – The monthly repayment amount will be
debited from your bank account, the details of which you are required to
provide at the time of setting up this mode of repayment.
- Flexible amount – There is no minimum and maximum amount that makes you qualify for the consolidation of loans.
- No defaults – The main advantage is that you stop falling
behind on payments since you were not able to keep a tab on the repayment
schedule of different loan accounts.
Last
but not least, you are at peace and do not have to worry about
defaulting on payments that eventually get recorded in your credit
the report, thereby highlighting you as financially irresponsible. However,
one important drawback of student loan consolidation is that you pay moreover a period of time.
but not least, you are at peace and do not have to worry about
defaulting on payments that eventually get recorded in your credit
the report, thereby highlighting you as financially irresponsible. However,
one important drawback of student loan consolidation is that you pay moreover a period of time.
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