Student Loan Consolidation The Good Bad And The Ugly

Student Loan Consolidation The Good Bad And The Ugly



Student Loan Consolidation-The Good,​ Bad,​ and the​ Ugly
With tuition costs rising across the​ country,​ it​ has become increasingly necessary for college students to​ take on​ debt in​ an​ effort to​ get their degree .​
But student loan repayments are often difficult for students to​ make,​ especially considering that early on​ graduates incomes are typically quite a​ bit lower then their ultimate earning potential .​
Due to​ these circumstances,​ Student Loan Consolidation is​ a​ valuable option for many recent college grads to​ pursue .​

How Student Loan Consolidation Works
Student Loan consolidation works like most consolidation programs .​
a​ single lender takes on​ the​ various loans you​ have accumulated,​ like Stafford,​ Perkins,​ HEAL,​ NSL,​ and private loans .​
While the​ terms and repayment conditions vary among these many different lenders,​ a​ single loan consolidation company will pay off all these loans and offer you​ a​ single,​ typically longer term,​ loan .​
What this means practically,​ is​ that instead of​ having to​ pay off one loan in​ 3 years,​ another in​ 5,​ and another in​ 10,​ or​ having one loan’s interest rate be fixed and another variable,​ all your loans are compiled under a​ single system .​
you​ can then negotiate with your loan consolidation lender,​ about the​ terms of​ the​ loan .​
Typically,​ students opt for a​ repayment plan of​ 10 to​ 30 years .​
Obviously,​ the​ longer the​ term of​ the​ loan,​ the​ lower your monthly payment will be .​

Why Consolidate?
Consolidating your student loans offers you​ the​ opportunity to​ stretch out your payments,​ so as​ to​ take advantage of​ your future earning power .​
It is​ quite reasonable for students to​ believe that they will earn more as​ their careers progress,​ and by stretching out the​ length of​ their repayments,​ they won’t have to​ pay the​ most on​ their loan while their income is​ at​ its lowest point .​
Another benefit of​ student loan consolidation programs is​ that they take a​ lot of​ the​ confusion and problems out of​ student loan repayment .​
For recent graduates who have loans from a​ variety of​ public and private lenders,​ keeping up with the​ unique terms and conditions of​ every loan can often be a​ bit of​ a​ nuisance .​
For these reasons consolidation is​ a​ very popular option .​
But that does not mean that it​ is​ not without its costs.
Why Not Consolidate?
Loan consolidation of​ any variety,​ is​ so appealing for lenders because they can charge relatively high consolidation fees .​
While student loan consolidation is​ regulated better than most forms,​ loan consolidation companies still manage to​ add quite a​ bit to​ the​ principle of​ the​ loan (that you​ will ultimately have to​ pay back) in​ the​ form of​ fees .​
One way to​ avoid this is​ to​ insist that you​ be offered the​ opportunity to​ pay for ALL consolidation fees upfront .​
By doing this,​ you​ can ensure that you​ will at​ least be made aware of​ the​ quantity of​ charges being imposed upon you​ .​
Another problem with loan consolidation is​ that by extending the​ terms of​ your loans (say from 5 to​ 15 years) you​ dramatically increase the​ amount of​ interest you​ pay on​ your loans .​
Your interest payments on​ your loans accumulate over time .​
This means that the​ longer you​ take to​ pay your loan back,​ the​ more interest will accumulate .​
Many students fail to​ notice this,​ as​ they only focus on​ the​ interest rate,​ and not the​ total amount of​ interest that will be paid over the​ life of​ the​ loan.
Student loan consolidation is​ a​ valuable tool for students who want to​ defer their repayments until they earn more or​ for those who find the​ nuisance of​ maintaining many of​ their individual loans to​ be too troublesome .​
It is​ important for recent graduates to​ consider,​ however,​ that these benefits,​ despite what lenders may lead you​ to​ believe,​ do not come without negative tradeoffs .​
By being aware of​ both the​ positives and negatives of​ student loan consolidation,​ you​ can make more educated decisions about the​ whether student loan consolidation is​ the​ right solution for you.




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