Nowadays, the cost of higher education is getting more and more expensive˳ Some families may not be able to afford to send their son or daughter for further education˳ Getting a student loan will help˳
There are 2 broad categories of student loans available˳ Government student loans and private student loans
Government or federal student loans are funded and administered by the US Department Of Education˳ It is classified under Federal Student Loans Aid Program˳ They have very few requirements other than you are studying in a US college or university˳ International students may also apply though approval is on a case by case basis˳
Every year, the student loan aid program disburse nearly 60 billion dollars so it is a good choice for get a student loan from the government˳ Thus the interest rates are pretty low˳
Private student loans are funded and administered by banks and other financial institutions˳ These lenders provide student loans at a higher interest rate compared to federal student loans˳ Some common student loans available are from Citibank and Sallie Mae
You are allowed to apply for both private and federal student loans for your education needs although I would not recommend it˳
For some students who have a few student loans to repay concurrently, it can be a financial drain on their family finances˳ That is where student loan consolidation comes in˳
Student loan consolidation basically consolidates all your student loans into one loan so that it is easier to manage and make payments˳ When you are getting a student loan consolidation whether from the government or the private market, your existing student loans are paid for and erased by the student loan consolidation lender˳ The balances are transferred to the new student loan consolidation˳ Thus you start a new loan and only needs to make a single payment each month˳
There are many advantages to using student loan consolidation˳ The interest rates will be lower since it takes the average interest rates of your previous student loans˳ Thus due to government legislation, the maximum interest rate cannot be higher than 8˳25 percent˳
It becomes a lot easier to manage a single student loan and payment are easier˳ The repayment options are quite flexible˳ For federal student loan consolidation, you can opt to start repaying after you have graduated from school˳ There are also several other options˳
Another beneficial side-effect of student loan consolidation is that it can also improves your credit score˳ Since you are effectively clearing all your old student loans and taking a new one, your credit score will increase and is important if plan to take other types of loans in the future˳
Source by https://ezinearticles˳com/?How-Does-Student-Loan-Consolidation-Work?&id=340925
