Friday, January 17, 2014
Consolidating Federal Student Loans
Consolidating federal student loans is an option most graduates choose these days.
What is the reason for this?
Due to the high cost of college education today, many students are forced to take educational loans even with scholarships and grants. Naturally, after graduation, these individuals will need to repay these debts which in four years time may have piled up to frightening if not depressing amount. Whats the benefit of debt consolidation?
The main advantage to this is that your multiple loans will disappear and you only have to worry about paying in a more affordable monthly payment.
What are your options when consolidating federal student loans?
There are two programs that provide low fixed interest rates which means you dont get affected with any increase in interest rates for the duration of your repayment term. These are:
1. Federal Family Education Loan (FFEL)
2. Federal Direct Student Loan
What if you have private college loans?
There are private consolidators who can combine all your current loans together. Basically the process is the same with federal loans so you still get to pay a single monthly payment in an extended repayment period. The total amount you will be paying off to this consolidator is the sum of all college loans youve accrued during your education.
Whether you are consolidating federal student loans or private loans, you will get the same essential benefits: easier repayment method and more affordable monthly dues.
The only different is that there are privileges a federal consolidation offer that private consolidations dont. An example is the borrowers privilege to defer payment in case he decides to go back to school.
