There are some essentials about student debt consolidation than anyone considering unifying and reducing student debt should be aware of. Since not all debts are similar not al debts can be consolidated by the same means. Moreover, there are little variations that can alter the results significantly and save you a lot of money. Thus, it is important for you to know these basics about student debt consolidation.
Consolidating Federal Student Loans
Federal student debt consolidation is usually done through another federal student loan. This new loan combines the outstanding loans into a single loan and locks the interest rate. The benefits you can obtain by means of this type of consolidation are significant as all these loans are subsidized which implies low rates. If the rate is locked, this implies that you will have the same monthly installments for the rest of the repayment program while your income may improve.
Private Student Debt Consolidation
Private student debt consolidation is also done through a debt consolidation loan. However, this new loan will be a private loan. Though most of these loans are also subsidized, the interest rate charged may be higher than that of federal loans for students. As to the requirements for approval, provided that you are up to date with the payments there will not be a problem with approval as you are already showing that you can repay debt with higher monthly payments. However, if you have defaulted on a loan or have late or missed payments, you will have more difficulties during the qualification process.
Consolidating PLUS Loans
PLUS loans are awarded to parents and thus, these loans need to be consolidated separately from the loans awarded to students. However, it is possible to consolidate them jointly if both co-sign the same consolidation loan. However, this is not a common solution as the nature of the debts is different too and thus it is not always advisable to consolidate both debts simultaneously. Nevertheless, it can be done and sometimes, either the parents or the graduated student, choose to consolidate through a home equity loan and unify all student debt and consumer debt into a single loan.
Joint Consolidation Of Federal Loans And Private Student Loans
This is a particularly complicated issue. Private student loans can not be included in federal consolidation loans due to obvious reasons. However, federal student loans can be included in private consolidation without difficulties. However, is it advisable to do so? Generally, No. This is due to the fact that federal loans are subsidized loans and carry low interest rates while only some private student loans are subsidized and even those which are still charge a higher rate than federal loans. Thus, by consolidating, you would be turning an otherwise cheap debt into a more expensive one.
Higher Debt, Lower Payments
Of course, if what you need is to bring some ease to your financial life and would benefit from lower payments, private student debt consolidation offers better chances of getting longer repayment programs and thus, lower installments so your debt becomes more affordable.
About the Author
Devora Witts is a certified loan consultant who instructs people regarding Consolidation Loans With Bad Credit and Bad Credit Personal Loans. To get aid with your financial situation you can visit her at http://www.badcreditloanservices.com
Tuesday, June 16, 2009
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment