It has become a practice for people to resort to students loans in order to finance their education. There are various sources of student loans; however, unlike scholarships, these are indeed considered liabilities even if the source is the government.
These are considered unsecured loans or loans without warranties. Typically, the repayment period starts six months after graduation or completion of studies.
This is to give the debtor enough time to secure a job and start repaying the loan.
Understanding Student Loan Consolidation
When an individual takes on multiple loans to finance his or her studies, it comes to that point where the numerous staggering loans could become overwhelming.
This is where student loan consolidation comes in. The student consolidates all his loans into one outstanding loan which he has to pay with a single check monthly.
What Do You Get from Consolidating Your Loan?
Consolidating your loan is extremely beneficial. For one thing, it would be such a great relief not having to juggle all your loans monthly. In summary, the advantages of this type of loan consolidation include:
1. Reduction of monthly loan payment.
When you consolidate your loans, you could expect a huge monthly payment reduction to almost half of what you have been allocating and paying monthly with your previous unconsolidated loans.
This would allow you to set aside money for your other needs, especially if you have just started working right after your graduation.
If you could secure a lower interest rate for your consolidated loan, you would be enjoying nifty savings from the reduction of your payment. And even if the monthly payment was reduced due to term extension, you would still enjoy the monthly low payment.
2. Monthly Instalments.
3. Proportional Payment to Salary.
Usually, when you consolidate your loans, the lender would allow you to pay a lesser monthly payment in consideration of how meager your salary still is. The increase in payment is proportional to what you can afford with your salary. If you can afford it, you can pay a larger monthly payment.
4. Loan-term extension. When you consolidate your loans and you would want to opt for a long-term payment scheme, this would be an acceptable proposition. The lender would give you as much payment space as he could.
5. Multiple Repayment Schemes. Loan consolidation allows for various methods of repayment.
6. Incredibly lower interest rates. This is the foremost advantage of loan consolidation as it allows students to pay their loans in a much, much lower rate.
7. Free processing. Unlike other loans where you would have to sort out a myriad of papers and processes just so you could get a loan, loan consolidation would not even require you to pay for the processing. On the contrary, you would be given additional benefits.
Student loan consolidation is such a great way to be relieved of your multiple debts. You would be juggling one loan for each month, issuing one check, and saving the rest of your salary for yourself and for your future.