Student loan consolidation
In the United States, there are many college students or students ready to go to college who do not have enough money to payoff higher education. The government offers the Federal Family Education Loan Program as well as the Federal Direct Student Loan Programs to help students and families with the costs associated with college.
These programs include consolidation loans that let the student consolidate certain types of loans into a single debt. The loans that can be consolidated through these programs are the Stafford Loans, PLUS Loans, and Federal Perkins Loans. The reason that loan consolidation is important is because it reduces the monthly payments for the student and makes the term for the loan longer.
The great things about loan consolidations is that the loans have a fixed interest rate for the life of the loan..
For consolidation loans, the loans usually has a longer term that most other loans. The debtor can choose anywhere from ten to thirty years. The monthly payments are lower than it would have been had the student not consolidated the loan, but the total amount that is paid over the term of the loan is higher than it would have been with another type of loan.
The fixed interest is calculated with a weighted average and the features for most original student loans such as a post-graduation grace period and special circumstance forgiveness are not carried over. For these reasons, a student consolidation loan might not be suitable for every debtor. Some may have an easier time sticking with the original loan agreement..
Student loan consolidation often allows the student to keep better track of their student loans. When leaving college, students often carry loans from various different sources resulting in multiple monthly bills. A student loan consolidation can take all smaller loans and combine them into one total loan with one loan payment..