The Process of Student Loan Consolidation

There are 2 parts of student loans: government student loans and private student loans.

Government student loan is financial support given and managed by the US Department Of Education. It is categorized under Federal Student Loans Aid Program. Only a very few requirements are needed rather than when you are attending in a US college or university. On a case by case basis, overseas students are also allowed to apply though this approval.

Every year, the student loan aid program spends nearly 60 billion dollars as it is a right decision to apply for a government student loan. Thus the interest rates are quite handy.

Private student loan has its administration and fund under the bank management and other financial foundations. The student loans provided by these lenders cover a higher interest rate rather than the federal student loans. 

You can apply for both federal and private student loans for your education necessity even though I like not to recommend it.

For some students who have a few student loans to repay concurrently, it can be a financial drain on their family finances. That is where student loan consolidation comes in.

Student loan consolidation basically consolidates all your student loans into one loan so that it is easier to manage and make payments. When you are getting a student loan consolidation whether from the government or the private market, your existing student loans are paid for and erased by the student loan consolidation lender. The balances are transferred to the new student loan consolidation. Thus you start a new loan and only needs to make a single payment each month.

Using student loan consolidation brings many advantages. You can have a lower interest rate because it takes the average interest rates from the student loans before. The utmost interest rate cannot be higher than 8.25 percent due to the government legislation.

It is getting much easier to handle a single student loan and payment is less burdening. The options for repayment are quite flexible. In case of federal student loan consolidation, starting the repayment after leaving the school and the other ways is personally an optional decision.

Besides that, student loan consolidation also can make your credit score much better. Successfully deleting all your old student loans and getting the new one, your credit score will rise and is valuable if you consider to find the other kinds of loans in the future.