Advantages and Disadvantages of Student Loan Consolidation
Advantages and Disadvantages of Student Loan Consolidation
Are you currently facing problems on how to pay the various student loans you have incurred while still in college?As fresh graduates, it is not surprising that you are currently in this predicament because of the various financial obligations you have taken upon yourself while earning a higher form of education. A college education is quite expensive these days and the only way for one to cope is to take advantage of the different student loans available. The two types of federal student loans are the subsidized and the non-subsidized loan. Other than this, students can also take advantage of private loans offered by banks and other private lending institutions. If you have taken several loans the whole time you were in college, it is inevitable by the time you finish school you will be deep in student debts. This is the reason why some people would advise you to consolidate your loans as a solution to your problems. However before you can decide if this is the best course to take, it is best to study the advantages and disadvantages of consolidating student loans.
Advantages:
1. Consolidating all your multiple loans into one will take away the pressure of having to pay several bills. You only have to concentrate on one loan, one interest rate and one bill each month.
2. You can opt for a longer repayment period. Usually a student debt is payable within 10 years but with student loan consolidation, it can be extended up to thirty years.
3. With a longer repayment period, it also means paying a smaller monthly payment. This would give you extra spending cash in your pocket.
4. There are no other extra fees charged when you consolidate your loans.
5. There is no penalty if you choose to pay off your debt early.
6. No credit check is required when you apply for a student loan consolidation.
Disadvantages:
1. If you choose a longer repayment period, the total amount you will be paying in the long run will end up much more than the original loan amount.
2. Once you consolidate your loans, borrower's benefits like interest rates discounts and rebates will no longer be available.
3. If you decide to consolidate your loans within the 6-months grace period, your loan payment will start immediately.
4. It may be possible that your consolidation interest rate will come out higher than the existing rate of your current individual loans.
5. You can consolidate your various loans only once.It is very difficult focusing on your career if you are burdened with so much financial problems. Knowing the different advantages and disadvantages of student loan consolidation is very important as it can help you decide what the next step to take is.
1. Consolidating all your multiple loans into one will take away the pressure of having to pay several bills. You only have to concentrate on one loan, one interest rate and one bill each month.
2. You can opt for a longer repayment period. Usually a student debt is payable within 10 years but with student loan consolidation, it can be extended up to thirty years.
3. With a longer repayment period, it also means paying a smaller monthly payment. This would give you extra spending cash in your pocket.
4. There are no other extra fees charged when you consolidate your loans.
5. There is no penalty if you choose to pay off your debt early.
6. No credit check is required when you apply for a student loan consolidation.
Disadvantages:
1. If you choose a longer repayment period, the total amount you will be paying in the long run will end up much more than the original loan amount.
2. Once you consolidate your loans, borrower's benefits like interest rates discounts and rebates will no longer be available.
3. If you decide to consolidate your loans within the 6-months grace period, your loan payment will start immediately.
4. It may be possible that your consolidation interest rate will come out higher than the existing rate of your current individual loans.
5. You can consolidate your various loans only once.It is very difficult focusing on your career if you are burdened with so much financial problems. Knowing the different advantages and disadvantages of student loan consolidation is very important as it can help you decide what the next step to take is.
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