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All you need to know about student loan consolidation

BY: David Prakash Kumar | Category: Education | Post Date: 2009-09-25

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   David Prakash Kumar
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Students in many courses of study need a lot of money to complete their education. Many financial institutions may give various loans for the students. The students use this help in the form of loans to complete their education. The loans that are taken by the student during the course of study needs to be repaid in monthly payments depending on the amount that has been granted as loan to the student.

When the student does another course as part of the education, the student may take another loan. As a person keeps taking various loans, at one point of time there may be a number of loans. Each of these loans may have a different interest rate depending on when the loan was taken. The student consolidate loan helps to club all of these various student loans together at a particular rate of interest.

There are various advantages and disadvantages that are associated with the student consolidated loan. These advantages and disadvantages are listed and explained in this article.

Advantages of a consolidate student loan:

1. Less troubles and hassles:
When the individual clubs all the loans together, the obvious advantage is that there is less trouble involved in calculation of various interest payments. The time that is needed for paying each of the loans is also saved when the individual consolidates the loans. Saving time in this era when time is considered as gold itself is a great benefit.

2. Saves money: When the individual consolidates the loans, then there is a lot of money that can be saved. This is because when the individual consolidates many loans together; there can be a decrease in the overall rates. This will save hundreds of dollars each month depending on the total amount of loan that was taken in the first place.

3. Ability to pay on time: Many people who have taken out more than one loan for their studies find it difficult to repay the loan because of various reasons including lack of time or lack of money. When the actual money to be paid decreases, the individual may be able to improve the payment capability. This will enable the individual to improve the credit history. This is very important because as the person improves the credit history, then the person can become eligible for more loans in the future.

The consolidation of student loan also has some disadvantages. These disadvantages are:

1. Rate hike:
Instead of a decrease in the interest rates, there can be a chance of increase in the interest rate of the consolidated loan. This depends on the company that has accepted to consolidate the loan. In this case, the individual whose loan was consolidated will end up paying more than what was being paid before. This is a major disadvantage of student consolidated loan. One has to remember though, that this disadvantage is not very commonly seen.

Number of times for consolidation: Another major disadvantage of student loan consolidation is that the loans can be consolidated only once. This being the case, if an individual needs to consolidate the loans again in future, then it will not be possible. So planning the number of loans to be taken has to be pre planned.

Article Source: http://www.saching.com

About Author / Additional Info: I am a physiotherapist and also a freelance writer. I have been writing for many blogs and websites and also take up freelance assignments. Comments are welcome at prakashdavid@rediffmail.com

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