| School loan consolidation |
| Written by Henry Johnson | |
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As an increasing number of students are leaving college for the work force saddled with large amounts of student loan debt, consolidation loans are an increasingly popular way for students to reduce monthly payments and lump their outstanding loans into a single, manageable debt. According to FinAid.org, close to 66 percent of the students graduating from college in 2009, or about 1.8 million students, have taken out student loans to fund steadily increasing tuition and room and board costs. The average debt of a graduating senior is close to $23,000. As many borrowers have learned, student loans are nearly impossible to shake. They cannot be discharged in bankruptcy courts, and if you fail to repay federal student loans, the government can garnish up to 15 percent of your salary, seize your tax refund or take part of your Social Secuirty benefits. A loan consolidation combines all your existing loans into a single loan with new, usually lower, interest rates and repayment options. Students using a loan consolidation have certain privileges in terms of availing them through student loan consolidation programs. There are many benefits of student loan consolidation or school loan consolidation -- they can lower your monthly bills, and save you a significant amount of money over time. By consolidating your student debt, you may also be able to retire this debt in a more timely fashion. Some of the key benefits of student loan consolidation are: Convenience: When you're paying for multiple loans, your dealing with multiple bills, writing multiple checks and having to keep current with payments that may fall on varying days throughout the month. Juggling all these loans makes it easier to make a costly mistake by missing or forgetting to make a payment, a mistake that can hurt your credit rating or result in late fees. By consolidating your student loans into one account, you earn the convenience of having only one payment to one creditor on one due date per each month, thus making your life a lot easier. Breathing space: Having to write four checks for $80 to four lenders each month can take a big chunk out of the average recent college graduate's meager budget. By consolidating the loans, you'll most likely reduce the amount of money you have to shell out monthly, allowing you to eat something other than beans and rice, rice and beans every day. Once your income increases you can start paying more than the monthly minimum, thus allowing you to perhaps pay off the loan early. Credit rating: Student loan consolidation can help improve your credit rating. As mentioned above, having to keep track of several loan payments per month makes it easier to miss a payment. Having a good payment history of meeting obligations on time helps ensure a good credit rating, which is essential to getting good interest rates of car loans, housing loans and business loans. Therefore, consolidating your loans and having just one monthly payment to meet makes it easier to keep your payment history in the green and your credit rating high. When consolidating student loans, determine whether your loan is a government loan or a private loan. Federal loans cannot be consolidated with private loans. Federal loans can be consolidated by visiting. According to Forbes magazine, if you would like to consolidate your private student loans, you should turn to some of the larger Wall Street bankers such as Wells Fargo. All of these institutions offer slightly differing terms, and all have set limits on the amount of total debt you can consolidate. Let's face it, coming out of college saddled with mountains of debt is no way to start a life. For students seeking to preserve their monthly take-home pay and improve their credit rating school loan consolidation is a very helpful option. |
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