Know the Perils of Consolidating Your Student Loans
There’s a lot of of college loans at hand for College Students who’s searching student aid to go to a University. A common college loan consolidation procedure countless students take is through the U.S. Government Federal Loan Program. A Free Application for Federal Student Aid (FAFSA) form must be filled out before a Student can be considered for a particular government student loan. There are also four types of government loans namely, Graduate PLUS Loan, Parent PLUS Loan, Perkins Loan and the Stafford Loan. With innumerable websites and supposedly experts in the media, it is imperative that a Student obtain the most up-to-date student loan consolidation advice they can get.
Merging your loans can be critical for Students to get their financial situations under control. Student loan consolidation simply means the act of obtaining one loan to pay off all the others, thus creating one loan where a Student or the Parents may have had 2 or more loans to pay off. Government consolidation can make a borrower choose from the four repayment procedures like the extended payment plan. Merging your student loans generally results in a lower monthly payment with no penalties included for the early paying off of the loan.
Furthermore, in most cases, there is no credit check needed in consolidating your government student loan thus this may result in a lower interest rate. And also, if a government loan is consolidated its application process will be a lot simpler. Parents or Students with Private loans will want to weigh the pro’s and con’s of private consolidation before taking action.
Consolidating your loan may decrease your monthly payment and string out the repayment term longer. This helps many students get on their feet and obtain a good paying job so that repaying their student loan doesn’t put them into financial hardship.
One needs to know the pitfalls associated with student loan consolidation before taking action. This plan of action is not a good choice for everyone. There are pitfalls to consolidation, many of which no one is willing to educate the Student about.
Some students consolidate their loans then do nothing to improve their financial status. Then when it comes time to repay, they are financially strapped due to having to repay their student loan.
Consolidating your government college aid during the six month grace period will result to the loss of the rest of the grace period. Furthermore, a consolidated loan means an extended payment plan which can cause a the total amount to be paid back to be raised as time goes by. As a matter of fact, the total amount paid back may reach thousands of dollars in cost. Thus, sometimes, consolidation may not be convenient and cost-effective.
Government student loans are truly a gift for students who are in need of financial aid. However, consolidating it may or may not have a positive effect on your long term financial situation. Thus, a wise Student will review all of his or her options before consolidating their aid packages and do diligent research to make sure student loan consolidation is right for their financial circumstance.
Tony helped his kids through College by finding them Scholarships and grants to pay their way. In doing so, other Parents and Students came to him for help. So as a hobby, he started Student Loan Advice to help others. This site answers many questions that Parents and Students have about financial aid for College. One of the most popular questions is, How Do Student Loans Work. Visit his site to find this and other questions asked by real Students.