The issue of student loans has been in the news lately as authorities ponder on way to manage growing debt. According to Federal Reserve statistics, student loans stand at $1,115.3 billion an increase of 13.9% from 2013.
To avoid being in this category, it is time to listen to expert advice from independent financial credit platforms. Armed with the right information, you will be able to decide the best approach to handle your loan, of which loan consolidation is cited as the best.
Overview of Student Loan Consolidation
Loan consolidation means combining of several student loans leading to a single monthly repayment as opposed to multiple ones. In financial speak, you are simply refinancing your loan and all other loans are considered paid once the plan starts working.
The reason most students find themselves in multiple debt is because federal loans come in different varieties including direct subsidized, direct unsubsidized, subsidized federal Stafford, direct PLUS and PLUS loans from the Federal Family Education Loan (FFEL) Program.
On the surface, student loan consolidation looks like a deal made in heaven.However, financial experts advise you to get a broader enquiry before making any financial move.
Pros of Student Loan Consolidation
Here are some advantages you will enjoy:
- Streamlined bill repayment:With one loan to handle, you will not have the pressure of remembering all repayment dates while still handling your first job. Simply speaking it gives you peace of mind.
- Longer repayment period:You can consolidate several loans in order to ease pressure on your current or future expected finances.
- Lower interest rates:It is possible to lock in a lower fixed interest rate over the life of the new loan and again this helps you to manage your finances better.
- Alternative repayment plans:Loan consolidation will give you more repayment plans including income-based repayment among others dependent on your financial situation. What’s more, you will be able to switch your variable interest rate to a fixed rate.
- Switch lenders for more discounts:Student loan consolidation allows you to switch from a lender who does not offer certain benefits to one who does. Such benefits include discounts on interest rates paid on time among many others.
Other benefitsinclude resetting of the clock on deferments and forbearances and restarting of the loan terms even if the loan was already under repayment.
Potential Downsides of Student Loan Consolidation
While this program seems perfect it still has weak points including:
- Higher eventual payment due to the elongated period and more in total interest.
- Loss of individual loan perks:If your loan has perks such as interest rates discounts, principal rebates, or loan cancelation benefits you risk losing them once you consolidate.
- Loss of grace period:In case you consolidate the loans during their initial grace period then you have to start repaying immediately for the refinanced loan.
- Prepayment penalties:Some financiers have penalties to avoid cancelation of the agreement and you might have to suffer these.
In essence, student loan consolidation is a decision you take based on your financial situation. With this insight fromhttps://www.trustpilot.com/review/www.nationaldebtrelief.com, you can now sit back and think about whether this plan really suits you. Why not visit this platform and learn more about your debt relief?