There are numerous college guys like John who took
staggering amounts of student loans while they were in college. But the fact
that they will have to pay them back did not hit them until they almost were
graduates ready to leave college. While acquiring student loans might be
relatively easy, paying them back is not. This is why millions of college
graduate grapple under the burden of their student loans. Student loan
consolidation companies might help such people like John but before availing of
any such sort of help one needs to understand the concept of consolidation a
little deeper and to become a little street smart by following a few tips.How is consolidation a waste of money? Experts from some student loan consolidation companies say that if a student is some how able to manage paying the various student loans all with their variable rates of interest then it is not advisable for them to take up student loan consolidation. The simple reason which they state is that by stretching out or refinancing loans by consolidation only leads to payment of more money in the longer stretch. Though the monthly payments might reduce but the total amount of money needed to be paid increases many fold. How ever if the student is unable to pay the student loans or feels that in future it might be difficult to do so then consolidation of student loans offer many alternatives for them.
How is federal students loan better than private? Almost all
the student loan consolidation companies feel that federal students loan is a
better option to avail of as from last July students having this loan can repay
it with the income based repayment plan. This means that the repayment amount
will be directly proportional to the income of that student. This option is
highly suitable for students who go in to low salaried jobs like public
services etc. The monthly payments are directly capped according the salary of
that individual.
What should students with private loans do? There are
several students who have already opted for private loans which have variable
rates of interest. For such students it is advisable to create a strong credit
history by repaying their credit card debts timely, or they must have a strong
job. With such tricks the rate of interest asked by various student loan
consolidation companies can be lowered. For them consolidation is advisable.
Thus federal loan or private loan it depends on
the student as to how to repay it and also repayment was never so easy as it is
now. But none the less consolidation of loans should always be done after
giving proper thought to it. The pros and cons should always be thought upon
and discussed. And as stated earlier with a little help from student loan
consolidation companies and a little financial planning can do wonders to the
financial status of a student who has to repay a student loan.