There are many ways to finance your college education. There are scholarships, grants, low interest student loans, and private loans. The private loans are recommended as a last resort for financing. These types of loans are taken out by either your parents or yourself.
The private student loan can be applied for with a cosigner if you have no established credit. It is also acceptable to have your parents or grandparents cosign because they may be more credit worthy.
In many cases a private student loan can qualify for special interest rates from certain lenders. With any loan, the smart thing to do is borrow only what you will need for your schooling.
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College can be expensive, especially for certain fields. Certain professions can result in student loans being as much as $160,000 upon graduation. This can put a serious financial strain on any new graduate. You can either start making payments on your student loans while you are in college or you can wait until after college. When you are going to wait until after college to repay the loans, one solution is a student consolidation loan.
Chapter 6 – Student Consolidation Loans
There are many reasons a person may decide to consolidate their student loans. After so many years of being in college, the number of student loans may make it hard to remember when each one is due. With a consolidation loan, there is only one monthly payment to worry about.
The ability to repay the student loans can be more flexible with a consolidation loan. The terms may allow you to negotiate an extended repayment schedule. You can also determine if the loan payment can be based on income. These are all things to consider when consolidating your loans.
There are times when the repayments on each loan can add up to a large sum. By consolidating the loans you may be able to cut the monthly payments to almost half. You will have to determine this by speaking to the lender. You will have to realize the terms of the loan will be extended. The reduction in payments may be worth it, though.
When you consolidate your student loans the interest rates may actually be lower with the new loan. This can significantly reduce the amount you pay back. However you must take into consideration all the aspects of consolidation when you make this decision.
One of the benefits to using a consolidation loan is it resets the clock on the loans. This means the deferments from the other loans can start back at day one because this is a new loan. Some of the three year deferment terms can be re-started. This can be a bonus to some professions which must have periods of internship.
There are some drawbacks to consolidating the student loans. One of these drawbacks is the loss of the grace period which accompanies many student loans. The payments for a consolidation loan are generally started when the loans are combined. There are some exceptions to the rule. This could mean applying for an unemployment deferment. This would allow the loan payments to start up to three years from the date of the consolidation.
Certain loans have longer deferment times and lower interest rates than others. The balances must be weighed before making a decision to combine your loans into one payment. The Stafford and Perkins loans can both be affected by a consolidation loan.
Remember you are never obligated to set up an alternative repayment schedule. The lender may suggest it to lower the payments. You can still stick with the ten year repayment plan which comes with most of the loans.
One last thing to remember is you can only choose to do this one time. Although the...