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Student Loan Consolidation: Educate Yourself



The easiest way to reduce your student and school loan debt is through consolidation of student loans. Student loan consolidation results in less debt amount and lower payments if the average interest after consolidation is lower than it was before. This is just a way to refinance one or a group of federal student loans at a lower interest rate, in the way refinancing a mortgage loan at a lower interest rate would reduce monthly payments and the total amount paid.

There are two basic kinds of school loans - private and federal. Federal school loans are almost always at a much lower interest rate than you would get for an unsecured private school loan. This is due to the nature of the federal loans. You should never consolidate both private and federal loans into a single private loan because only the federal loans carry government backing. They can be refinanced at a much lower interest rate than the privately financed school loans. So when you want to consolidate school loans, do the federal loans together. Then look at consolidating your private student loans. With student loan consolidation, there are no fees, credit checks, income verifications, or prepayment penalties. This will help you reduce your monthly payments in many cases by up to 50%, which in turn can save you thousands of dollars over the time you are paying off your loan.

In most cases, student loan consolidation is available to both undergraduate and graduate students. Multiple outstanding loans are refinanced into a single loan allowing you to make one monthly payment. To help borrowers take advantage of lower monthly payments and often fixed interest rate, many lenders will team up with academic institutions to offer student loan consolidation.

Borrowers, who choose to consolidate their student loans will regularly be given an opportunity to lock into a fixed interest rate for the entire life of the loan and which will reduce one's monthly payment. It may be useful to know that the US Government mandates all the rates and policies when it comes to federal student loan consolidation. What does this mean for you? This means that you have the choice of paying off multiple loans directly to the government or through a student loan consolidation loan. Either way your loan is being paid off, but it comes down to how much you want to save.

If you are lucky enough to find a reputable agency, which deals with student loan consolidation, a 1% consolidation loan discount for on-time consecutive monthly payments may be offered as an incentive. This is a great example to show that there are firms, which really are not out to make money off your debt rather their goal is completely the opposite. They want to give you a helping hand out of debt. With many of the less reputable student loan firms, if you miss a payment, you could lose some of your borrower benefits. So it’s important to find an agency with a truly unconditional fixed rate on student loan consolidation to complete your studies effectively.

It is true that knowledge is power, and therefore you should learn and research a lot before choosing an agency for student loan consolidation services.

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