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Student Loan Consolidation

What is it?

Student loan consolidation is when you gather up all your student loans and hand them over to one company that charges you one monthly rate. A great benefit of this is a lower monthly rate.

Additional Benefits:

Consolidating your student loans has other benefits. The following are some additional benefits:

-Stop writing 4 different checks: Consolidating simplifies your finances by allowing you to write only one check instead of several checks.

-Smaller fee: Generally, when you consolidate, you end up with a lower monthly payment.

-Obtain higher credit: Once you choose to consolidate, your new lender will pay off your previous debts and merge them to generate 1 new one. Because your old loans were paid in full, your history looks better which, consequently, improves your credit rating.

-Lock in interest rate: If you had federal loans the interest rate fluctuated every year on July 1st. By consolidating you'll lock in one low rate.

Consolidation loans are wonderful because obtaining them is so easy. You are not required to be employed, have collateral or a cosigner to consolidate your loans. They don't even cast a glance at your credit score!

The Problem With Consolidation:

Every decision has a downside. Prior to consolidating your loans, make sure you investigate the positive and negative aspects of consolidation. The following is a list of a couple disadvantages to consider:

-Interest rates fall every now and then. If you have consolidated, you are stuck with one rate.

-After consolidation "unconsolidating" is out of the question.

-New terms: Your new consolidation loan will have different terms than your old loans did.

-If you choose to extend the life of the loan you will wind up spending more (in interest) than you would have.

Now that we have shown you the positive and negative aspects of consolidating your student loans, you'll want to know whether or not you are eligible for one. To qualify for federal student loan consolidation, there are a few requirements. You have to owe more than $10,000 in outstanding federal student loans. You must be graduated as well. Last but not least, you can not consolidate any defaulted federal student loans until they have been repaired.

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To learn more about Student Loan Consolidation please visit the Student Loan Consolidation page. Being a college student herself, Elise Fisher loves writing articles to help college students learn more About-Student-Loans.com.

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