Why Go for Student Loan Consolidation

To better understand the concept of student loan consolidation, I’m going to give you a crappy example I’ve made up just awhile ago. It’s not that good (it’s crappy), but it should be able to make the topic a bit easier to understand. Here it is: you’ve been assigned by your mom to rake the leaves on the lawn. She wants you to gather them into 5 equal piles, burn it, and distribute it to 5 of her friends (for some stupid unknown reason). You find that very unreasonable as well as difficult and time consuming. Not to mention the energy and frustration you’ll be going through while at it. nnSo to make things easier, you get someone else to do it for you. You pile the leaves in a big bundle and have the guy you’ve hired do all the dirty work for you. Again the example sucks, but that’s the way student loan consolidation works. I’ll explain it here: going to college is one of the most expensive events that are going to happen in your life, and it’s hard to stumble across an individual that doesn’t need to take out several loans to cope up with all the expenses. Now, student loans may in general be categorized under two types, the first being: federal student loans. nnThis type is given through the US Department of Education's Federal Student Aid programs, and considered the fastest and easiest type a student may get his hands on. The 2nd type is private student loans, which are obtained at financial institutions, such as the bank. Now whichever of the two you pick, there’s probably going to be a lot of them availed, which means you’ll be taking multiple loans. That means you could be paying back different lenders and paying for loans with various deadlines and interest rates, which is going to be a burden on your part. So to make things easier, you go for the method of student loan consolidation, where you put all those debts into one big “bag”, which means it’s treated as a singular or consolidated loan. nnThat’s convenient on your part because you make single monthly payments instead of many. There’s something that you should always remember though, which is not to consolidate the federal type with the private type. You see the interest on federal student loans is tax deductible, while the interest on the private type isn’t. By combining them, you lose the tax deduction – so don’t do that. What’s going to make you eligible for this service? Well basically there are 3 determining factors, the first being: you aren’t enrolled in any school anymore. The second is you’ve shown good conduct with paying your loans. nn3rd is you’re in the 6 month post-grad grace period. So what are the other benefits you should expect to gain when going for student loan consolidation (aside from convenience)? There are basically 3 advantages for you to gain here, namely: a lower rate of interest and reduction of monthly payments as the loan payback period is increased to 30 years. When you graduate, you’re going to have to pay everything you own back (obviously). So to make things easier for yourself, consolidate them.