You may have taken out several student loans over the course of your studies, and heard a lot about consolidation. Loan consolidation allows you to take all those different loans and merge them into a single debt. Before you decide to consolidate your student loans however, here are a few points to consider.
In essence , loan consolidation means that you can combine your already existing loans,and extend the repayment period, usually to between 10 and 30 years. Even if a consolidated loan earns from a fixed interest rate for the duration of the loan, you will actually be paying more in the long run because of the longer repayment period.
There are two types of student loan consolidation available Federal and Private. With Federal loan consolidation, a student can consolidate Stafford, PLUS, HEAL, Perkins and Direct Loans. There are no credit checks and no application charges or fees are required under the Federal student loan consolidation. The borrower does not need to be employed, and this loan requires no co-signer.
There are no penalties for prepayment with a Federal student loan consolidation. They can specify a prepayment which then accrues directly to the principal loan, if they pay more than the required monthly amount. This reduces the amount of interest paid and reduces the term of the loan as well.
The borrower can postpone payments if they opt to go back to school, using a Federal student loan consolidation. They may also apply for forgiveness in certain circumstances, like working in federal volunteer programs or teaching in economic development zones, military service and others. Federal consolidated loans are forgiven if the borrower should pass away. They qualify for a 0.6% reduction on the interest rate, if a borrower consolidates their loans during the grace period. Repayment, begins immediately however, and the rest of the grace period falls away.
Private student loan consolidation is offered by several financial institutions. Similar benefits to a federal loan consolidation are being offered like reduced monthly repayments with a fixed interest rate for the term of the loan. Private loan consolidation also offers a 48 month postponement for medical or dental residents, and a 36 month postponement for all military personnel who are still in active-duty.
With private student loan consolidation, however, the borrower will lose many of the benefits of the original loans. They do require a co-signer, and forbearance and forgiveness provisions generally fall away. If a borrower consolidates both Federal and Private student loans, they will only qualify for a private consolidation. Private consolidated loans offer up to 25 years repayment on undergraduate loans, and up to 30 years for postgraduate loans.
It should be weighed against the loss of benefits and discounts offered on the original loans even if the immediate repayment relief may seem attractive. The extended repayment terms result in a much higher amount being repaid; for example, on a consolidated loan of $50,000 over 25 years, the repayments total over $100,000. The monthly saving of $101 seems insignificant in comparison. Student loan consolidation should be considered if the borrower has no option but to reduce monthly expenses in order to make ends meet. If the borrower's original loans are federal loans then they can apply for a Federal student loan consolidation which appears to offer more benefits.
In essence , loan consolidation means that you can combine your already existing loans,and extend the repayment period, usually to between 10 and 30 years. Even if a consolidated loan earns from a fixed interest rate for the duration of the loan, you will actually be paying more in the long run because of the longer repayment period.
There are two types of student loan consolidation available Federal and Private. With Federal loan consolidation, a student can consolidate Stafford, PLUS, HEAL, Perkins and Direct Loans. There are no credit checks and no application charges or fees are required under the Federal student loan consolidation. The borrower does not need to be employed, and this loan requires no co-signer.
There are no penalties for prepayment with a Federal student loan consolidation. They can specify a prepayment which then accrues directly to the principal loan, if they pay more than the required monthly amount. This reduces the amount of interest paid and reduces the term of the loan as well.
The borrower can postpone payments if they opt to go back to school, using a Federal student loan consolidation. They may also apply for forgiveness in certain circumstances, like working in federal volunteer programs or teaching in economic development zones, military service and others. Federal consolidated loans are forgiven if the borrower should pass away. They qualify for a 0.6% reduction on the interest rate, if a borrower consolidates their loans during the grace period. Repayment, begins immediately however, and the rest of the grace period falls away.
Private student loan consolidation is offered by several financial institutions. Similar benefits to a federal loan consolidation are being offered like reduced monthly repayments with a fixed interest rate for the term of the loan. Private loan consolidation also offers a 48 month postponement for medical or dental residents, and a 36 month postponement for all military personnel who are still in active-duty.
With private student loan consolidation, however, the borrower will lose many of the benefits of the original loans. They do require a co-signer, and forbearance and forgiveness provisions generally fall away. If a borrower consolidates both Federal and Private student loans, they will only qualify for a private consolidation. Private consolidated loans offer up to 25 years repayment on undergraduate loans, and up to 30 years for postgraduate loans.
It should be weighed against the loss of benefits and discounts offered on the original loans even if the immediate repayment relief may seem attractive. The extended repayment terms result in a much higher amount being repaid; for example, on a consolidated loan of $50,000 over 25 years, the repayments total over $100,000. The monthly saving of $101 seems insignificant in comparison. Student loan consolidation should be considered if the borrower has no option but to reduce monthly expenses in order to make ends meet. If the borrower's original loans are federal loans then they can apply for a Federal student loan consolidation which appears to offer more benefits.
About the Author:
Companies can benefit tremendously from the outsourcing of computer services through a third party entity.