STUDENT LOAN CONSOLIDATION

If you have taken loans to fund your higher education and are about to graduate, then you can pay back the money by consolidating all your loans into a single consolidated student loan. Doing this would save you the trouble of making monthly payments to multiple lenders. Besides, you would need to pay a lower and fixed rate of interest.

Student loan consolidation works on a simple fundamental. When you are nearing your end term, you can start consolidating all your loans into one single loan to deal with a single lender and to pay a lower rate of interest. For example, you can take a loan and settle for a monthly instalment that allows you to keep 70 percent of your income to meet your day to day expenditure; the rest you can use to pay off the loan. As you pay a lower rate of interest on a single loan as compared to the amount you would have to pay on multiple loans, you also add to your savings.

Advantages of a student loan consolidation

• Lower monthly payments: Depending on your loan amount and the type of lender you choose, you can lower your monthly payments by as much as 50 percent.

• Simple loan payment: Instead of writing multiple cheques over time, you simply have to pay one lender. This also helps you give a clearer picture of your finances and you can plan your monthly expenditure accordingly.

• Fixed interest rate: If you have applied for loans from various agencies and student loan providers, you would need to pay variable rate of interest depending on the terms of the loan. When you consolidate all your loans into one, you pay a fixed and lower rate of interest on a single loan.

• Extension of loan repayment period: You may also ask for the extension of your loan repayment period to a good thirty years. This way you can opt for lower monthly instalments spread over a long term period. However, be judicious in choosing your options because longer the period, the more you would have to pay in terms of interest.