Student loan consolidation program is a repayment tool that assists to join all your student loans into one master loan which reduces your monthly payments considerably up to about 50%. The consolidated loans are combined into one major parent loan fro m a single lender which is in turn used to off set the balances accruing from other loans. It is similar in all ways to refinancing a mortgage. It also assists you to invest wisely with the money you have saved by consolidating your student loans.
Student loan consolidation program is divided into two major categories, majorly:
1. Federal student loan consolidation: – this type of loan greatly reduces your monthly payments. On is able to e-sign his application via the internet and the loan will be processed within a very short time. The interest rates on federal loans are based on the average weighted of student loan interest rates. This type of loan will have various rates depending on the type and disbursement dates. If one is enrolled under the federal program having variable interest rates, then it is advisable to consolidate them immediately. When you consolidate your federal loans, the interest rates will be the weighted average of all your loans approximated to the nearest 1/8 percent.
Consolidating either one or more federal loans into one major loan has several benefits. Some of them are:
Private student loan consolidation program: this too can be consolidated but not under the federal loan consolidation program. One has to consult first with his lenders in order to know the options available for him to explore about consolidation rates. It is a brilliant way to considerably reduce the monthly payments you are subjected to. It also helps to combine several private student loans into one manageable loan which is easy to finance. Refinancing your private student loans will greatly save you the trouble of having to service several payments. This will in turn help you to budget well thus reducing your interest rates.
There are several benefits that come along with consolidating your private student loan. Some of the benefits include:
In order to qualify for the student loan consolidation program, you have to meet the eligibility requirements set. Therefore it’s wise to see first if you meet such requirements prior to applying in order to save your time.