Loan Consolidation, a Best Friend of Ex-Students

Private Loans Are the Biggest Burden

Federal student loans usually carry very reasonable interest rates. Private student loans usually carry a pretty high interest rate. Walking down that aisle to accept that diploma can also mean walking down a bleak path shadowed with ponderous debt.

An option exists - student loan consolidation. With a consolidation, the loans are piled together, with one monthly amount, at one interest rate, to one lender, due on one day of the month. This payment will usually be far less than the aggregate of two or more loans.

Co-Signers Helpful

Usually, most private lenders require a co-signer when a student takes out a loan to cover educational expenses. However, that is not usually a requirement when a student seeks to consolidate their various loans. Of course, having one will not be a detriment. And, if the co-signer has an excellent credit score, this could mean even better interest rates and much more favorable repayment terms.

Another interesting option that some lenders are offering student loan consolidators is called cosigner release benefits. With this, after a period of time, usually four years, wherein payments have been successfully proffered, the cosigner is released from all obligations. This could be a bargaining point for a recent grad trying to find student debt relief whit the help of a friend or relative.

Look for Advantages

A lot of lenders who offer student loan consolidation programs have come up with some attractive ideas. One allows the former student borrower to make interest only payment for awhile. Usually, this allows the alumnus to pare away the interest which means lowering the amount of the actual loan and the loan consolidation. This can allow borrowers a substantial savings in the long run.

Another plan allows the length of maturity to expand ten years or more over the originals loans. It is immediately apparent how this can lower payments and increase monthly cash flow. Of course, most student loan consolidation lenders do not penalize the borrower if she or she is able to retire the loan before the maturity date is reached. This could prove useful should a higher paying job be acquired or if the ex-student realizes the benefit of some fortuitous windfall.

Future Finances

One of the terrific reasons of undertaking a student loan consolidation program is that it allows the alumnus to get ahead - a little relief from the student loan burden. Even should the student intend to go higher in the halls of academia, the transition is still somewhat disconcerting. The confusion atop the burden of debt is a tricky mental exercise. Consolidation can be a way to lower the debt burden and lower the transition trauma.