Students Loan Consolidation – How to go About it?
Being a student isn’t an easy thing: especially if you have several student loans as a product of decades of studying. That’s why options like federal student loan consolidation are very attractive since it provides the students with an alternative that can help them fix up their finances.
What Is Student Loan Consolidation
Today, if someone wants to attain a certain degree of success in life, it won’t be enough with an undergraduate degree. Although there are some exceptions to the rule, the vast majority of people aren’t lucky enough to climb the socioeconomic ladder with only a degree obtained at their state university.
Now, an undergraduate student needs, at least, one post-graduate degree, and the ability to speak at least one additional language. After all, there are 40’000,000 Hispanics inside the US. That’s a seventh of the population. And, considering that globalization has shattered frontiers through out the world, it’s a must more than ever.
So, if someone wishes to earn more than $100,000 per year, he or she will need to study, at least, an undergraduate degree, a post graduate degree, and a new language. That means up to 10 years of study (it may vary since it depends on the career). How are you going to pay for that?
Many students don’t have their ideas clear. Maybe someone who is studying to become a doctor will never consider that in 8 years he will be beginning a MBA. And these degrees don’t come cheap. A MBA can cost, easily, $80,000. How can a student pay that? Especially if he is still paying the debt of his undergraduate degree?
That’s why student loan consolidation exists. Since it is very difficult to predict what is going to happen with our careers, we may find ourselves in unforeseeable situations, in which we have to pay three different student loans to different organizations. What better option than to concentrate everything into one, single payment?
Types Of Student Consolidation Loans
As was mentioned before, there are two types of student consolidation loan. The first one is the federal student loan consolidation. In this kind of consolidation loan, all of your debts are bought by a consolidation company or by the Department of Education. In this scenario, the loans can only correspond to federal institutions, not to private ones.
The other type is the private loan consolidation. With this kind of consolidation loans, you will deal directly with a company which will make you an offer for consolidating your private loans. The problem in these types of loans is that the interest rate is higher. Although your monthly quotas can be lower, you will have to pay a higher student loan consolidation rate, and for a longer period of time.
And what about the differences between them? The main difference between them is that in a federal loan consolidation, you aren’t charged additional fees. On the other hand, with companies that offer private consolidation loans, you will need to pay a fee for their services. It may be more expensive, but is the only alternative for many students.