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Student Loan Consolidation Information

Student Loan Consolidation Definition

If you have too many loans you can combine them into one new loan from a single lender. This new loan enjoys various benefits, one of which is the possibility to make the structure of the loan according to your wishes.

Student Loan Consolidation Benefits

Generally, there are many benefits you can take advantage of if you decide to consolidate.

One of the reasons why you could consider consolidating your loans is to benefit from lower payments every month and a flexible repayment schedule. Not to mention that you don't have to think about many monthly payments, because you make just one and the possibility of missing a payment is decreased. Additionally, you might be after a fixed interest rate and consolidating your loans can provide you this possibility.

Furthermore, student loan consolidation provides additional benefits not found in other debt consolidation programs.

One of them is that your credit score is not taken under consideration when qualification is considered. Additionally, there is no limit on the maximum amount that you can obtain and you can defer the repayment in case of need. Finally, one of the greatest benefits is that you can deduct the interest that you pay from your taxes.

Student Loan Consolidation Disadvantages

The advantage of lower monthly payments can be viewed as a disadvantage as well. The reason for this is that it will take more time to repay the loan and as a result more interest will be accumulated. This means that the short term convenience will be negated by the long-term higher cost of the loan.

Student loans can be consolidated jointly but this can also turn into a problem. If you consider consolidating with the loans of your spouse you should think twice, because this may not be the best option. The reason for this is that in case you want to defer the payments on your loan both of you should qualify for this. In case you want to divorce with your spouse you will have hard time with the consolidated loan. Additionally, if one of you dies, the other should pay back the money. 

The Right Time to Consolidate

There are several times when you can consolidate your student loans:

  • During repayment
  • During the grace period
  • In some cases before your graduation

You should select the time to do it depending on the effect you want to achieve.

If you want to benefit from a lower interest rate you should do it during the grace period. You can also consider locking your rate if it is currently at low levels.

It is not recommendable that you consolidate immediately after graduation. The reason for this is that you may experience loss of some of the interest subsidies that you receive.

On the other hand, in case you want to have lower monthly payments now, consider an extended repayment plan.

Finally, whatever you goal is, keep in mind that student loan consolidation is an important topic that needs consideration during you do your studies. The nearer you get to graduation the more mail with offers you will receive. It is important to be careful about who you deal with.

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