What is student loan consolidation? Well it happens when a person takes a huge loan in order to close several smaller student loans of lesser amounts. But as is always there are many pros and cons in doing so therefore it is imperative that you are aware of them before you end up getting your loans consolidated. Under the scheme of loan consolidation you can pay off all the federal student loans as well as private student loans.
It is not that any student can get his or her existing loans consolidated and there are a few eligibility criteria as well for availing the consolidation of loans. A few of them are enumerated.
The student should not be enrolled in any course in the current year. Also if he is enrolled the status of his enrollment should be lesser than that of a part time student
The student should be paying off loan installment currently or should be within the “grace period” of the loan
Should have good credit history or a good track record in paying off the installment on time, in simpler terms
The loan should be amounting to at least between $5,000 to $7,500
These are the few eligibility criteria which a student needs to meet before applying for the consolidation of student loans.
Benefits of loan consolidation
A point to note here is that the loan consolidation scheme will take into consideration only the loans on your name. Hence you cannot mix loans on your name and loans on somebody else’ name. Another point to take care of is that you cannot consolidate both federal loans and private student loans together. So why should you have the loans consolidated? Here are a few benefits of having your student loans consolidated
Your billing gets streamlined
The time period for the repayment of the loan gets extended
The interest rate applicable can be changed from a fixed rate to a variable rate or vice verse when you go for loan consolidation.
Student loan debt consolidation is not for everyone. It normally has an extended period of loan amount and not every student can do so. Though there are benefits galore but at the same time there are many disadvantages like the increased interest rates on the loan amount. You should fully explore the consolidating loan scheme and know what you’re getting into before making this decision and going for it.
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