| Save Money, Pay Less, Spend More on What You | | | | more important items today, and less financial stress |
| Want? Sounds too good to be true, doesn't it? Well, | | | | for the student (who is typically already under |
| if you'll spend a few minutes learning about student | | | | enough stress dealing with their degree program and |
| loan consolidation, you'll soon be armed with enough | | | | other aspects of school life). |
| information to make some really good decisions and | | | | A student should seriously evaluate consolidating |
| help you achieve all of the above, and more. | | | | loans if the consolidated loan would result in a lower |
| Student loans are available to students (and parents) | | | | interest rate than the current student loans, and |
| in need of help with living costs while studying and | | | | especially if the student is struggling to make multiple |
| working on a degree program. For many students, | | | | student loan repayments already. |
| student loans are their largest source of cash and | | | | Often times, the merged loan includes a more flexible |
| income (in some cases, their only source). | | | | set of repayment options, plus no charges, fees or |
| What often happens is students acquire multiple | | | | prepayment penalties. In some cases, there may |
| student loans, then begin to have cash flow | | | | even be no pesky credit checks, loan collaterals or |
| problems, which leads to charges on one or more | | | | cosigners to deal with, as lenders have streamlined |
| credit cards. These credit cards are typically issued | | | | their processes in order to compete more |
| with very high interest rates, often 18% or higher. | | | | effectively. |
| This is a severely problematic financial trap, and a | | | | Student loan consolidation can reduce payments by |
| very tough way to get started in life for a young | | | | up to 60 percent. Actual amount saved will depend |
| person who is still in school or just about to graduate. | | | | upon the existing loan interest rates and the term of |
| Too many students leave college with debt that | | | | the original loans. Typical student loans are for a 10 |
| weighs them down heavily, burdening their lives with | | | | year term. |
| debt that will haunt them for many years to come. | | | | When consolidating student loans, it's possible to |
| So, how does student loan consolidation work | | | | refinance for up to 30 years (like a home mortgage). |
| anyway? Students accumulate multiple loans from | | | | It's important that there be no prepayment penalties, |
| various lenders. This leads to multiple significant | | | | since the student will likely want to pay these loans |
| payments each month, arising from several loans with | | | | off much sooner, once their earning power has |
| unfavorably high interest rates and overhead. | | | | dramatically improved after graduating and they're |
| Loan consolidation allows students to combine multiple | | | | progressing in a career which pays relatively well. |
| loans into a single instrument, one loan from a single | | | | Of course, the longer the loan period, the higher the |
| lender, typically at a more favorable interest rate. | | | | interest rate, lower the initial payments, which frees |
| In effect, this is like refinancing a mortgage or credit | | | | up precious cash flow when it's needed most - while |
| card or other debt consolidation - multiple debts | | | | the student is in school. |
| reduced to one. The balances of the original loans are | | | | So, if a student has multiple loans, typically in excess |
| paid off by the loan consolidation lender, and voila' - a | | | | of $7,500 total, there are many benefits a student |
| single, lower payment! The results: lower monthly | | | | consolidation loan. It's a great way to free up cash |
| payments, less overhead costs for the same | | | | flow, pay less each month, and save money while in |
| borrowed money, immediate cash flow to spend on | | | | school. |