Student loan consolidation College Loan Corporation comparison
If you are a college student, there is a attractive good chance that you have some kind of personal student loan. It seems that more and more with the rising cost of education, that students have to rely on financing their education so
that they can afford tuition every semester. This is no surprise as tuition has increased an average of 7% a year for the last couple of decades. Let’s face it, college is just expensive. So unless we work 50 hours a week, or manage to get lots of scholarships and go to a cheap school, we’re probably going to have to have some sort of student loan. Most of the time college students will get subsidized or unsubsidized Stafford loans. Nearing the end of their college education they will hear all sorts of offers with recommendations to consolidate their student loans, but is this a good idea?
First, let’s take a look at what consolidation does. In essence, student loan consolidation will take all of your federally insured loans and put them unto one big loan, so that you can pay a single payment, rather than a whole bunch of smaller ones after you graduate.
There are a few upsides and downsides to this though that need to be explained. First, let’s talk about the good. When you consolidate, you will lock in the current interest rateof student loans and it will stay that way for the duration of your loan. This is very good to do when rates are low, but when rates are a bit higher as they are now at 6.8%, it might not be the best idea to consolidate, especially as Democrats in congress are trying to cut that interest rate in half. If they get their way and rates decrease over night, then it would be a good time to lock in that better rate.
If you go with College Loan Corporation, they will give you a rebate if you make your first six months of payments on time. They will give you 2% of your total loan balance back, which can be a pretty sweet deal if you have thousands in student loans.There are a few drawbacks to consolidating your student loans though. The first is that this will prevent you from getting any more student loans, so don’t do this until your second semester of your senior year. Secondly, instead of having a 6 month grace period for your student loans,
you will have to start paying on them immediately.
All in all, it’s a good thing to do if you’ve already graduated and rates are low, but if rates are high and you are still in college, you should probably wait.
Student Loan Consolidation Tips:
There’s a price to pay for everything and it applies for promising life changes as well.
To a young adult that translates to college; however, a college life also has its own share of agonies, the biggest one among them being the student loans, which cause a lot of stress as the payback time draws near. These loans also influence considerably the future decisions of a student
as well as his/her credit history. Thus, to eliminate the stress factors (read student loan debt burden), a large part of the student community falls for refinancing; those who have already undergone the same have no other option but to go for a student loan consolidation plan.
For a student, a loan usually comes in the form of educational loans; if not a Federal student loan, which is more advantageous; it may mark the beginning of a new era in difficulties. Reasons are ample; while interests on federal loans are tax-deductible, and sometimes doesn’t even require a payback, an educational loan from a private lender accumulates interest that builds up to a hefty amount in no time and doesn’t provide any benefits. Taking all these into account, it’s only student loan consolidation plans that remains as the way out from the vicious circle.
A few rules do apply when it comes to student loan consolidation:
A student loan consolidation scheme doesn’t approve the mixing of private and federal student loans.
A company dealing in student loan consolidation requires the loan amount to equal or exceed a minimum amount.Out of a plethora of student loan consolidation plans, only the most applicable one is offered.
A few might raise questions regarding the student loan consolidation plans and might also be reluctant to avail one; for them, let it suffice to say that rejecting an offer of student loan consolidation often results in a bad credit report that hampers a considerable number of future prospects including future mortgages, car loans, credit cards and so on. Therefore, if you want to consolidate an existing loan, instead of going to private companies, it is better to go for the FFEL student loan consolidation scheme; this student loan consolidation scheme is considered a better option since it provides enough flexibility regarding the grace periods and very low monthly payments. Another point to be taken into account: the FFEL student loan consolidation scheme also offers a slashed down interest rate from time to time; if one can hook-up one such opportunity, it can save more than what’s expected.
The Facts About Student Loan Consolidation:
It is sometimes necessary for a person to take out more than one student loan in order to have enough money for college expenses. When this occurs, a person may find him or herself having to send payments to several different financial institutions or other agencies.
For this reason, it may be a good idea to look into a student loan consolidation plan. Although still considered a repayment plan,
this type of financial agreement may actually lower one’s interest rate and monthly payments.
If the interest rates on different types of student loans that were obtained by a person differ even slightly, this affects the amount of the monthly payment. And, even if the difference in the various monthly payments of several student loans is only a few dollars, this can add up in the long run.
A student loan consolidation plan eliminates the need to make separate payments. It is also relatively easy to prepare and apply for.
The person who enters a student loan consolidation plan simply obtains the current pay-off on each loan (not the loan balance, how much the final amount would be if the loan was paid off within, say, ten to thirty days. There is a difference). These figures are added up to reach a total amount.
The person who takes the total amount to a financial institution or other lending agency that offers debt consolidation loans and who will loan to someone who is “just starting out”. A new loan is actually made for the new figure, at the financial institution/lending agency’s current interest rate, but only one monthly payment, to the “new” lender, is required.
If repayment has already begun on the various loans, the total payout amount of all the loans will most likely be smaller than all the loan balances combined. Therefore, this may entitle the borrower to one lower interest rate. Monthly payments, therefore, would most likely be lower.If this was the case, and the borrower still wished to pay the same overall amount he or she was paying to separate lenders, this would be fine. If the borrower is already used to “doing without” the money, by adding the additional amount to the consolidated loan, he or she would not be
tempted to spend the “extra” money that has suddenly “appeared”.
There are many debt consolidation companies that offer the “best” rates. Careful research will reveal which company or financial institution actually lives up to the “hype”.