College and Consolidating

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What is student loan consolidation?

To consolidate your student loans means to take all of your various loans and give them to one company. One of the many benefits of this is obtaining a smaller monthly fee.

Other Benefits:

That's only one benefit of consolidation. Listed below are a few more benefits:

Simplify your Finances: Forget writing three or four different checks to your various lenders! Consolidation makes it possible for you to write just 1 check.
Lower Rate: Find a lender that will charge you a lower monthly interest rate and let them consolidate your loans.
Higher Credit: At the time you consolidate, your lender will repay your previous debts and combine them to produce one new one. Because your previous loans were repayed, your credit rating improves.
Lock in Your Rate: When you consolidate your interest rate is locked in. This protects you from future interest rate increases.

Consolidation loans are great because they are easy to get. You don't need to be employed or have collateral or a cosigner to consolidate your loans. You don't even need good credit!

The Problem With Consolidation:

There are usually disadvantages to every decision. Explore the ups and downs of consolidation before you join your loans. The following is a list of a couple disadvantages:

Once in awhile, interest rates will actually fall. If you chose to consolidate, your higher rate will be locked in.
Once consolidation you can't unconsolidate.
The consolidated loan will have new terms and conditions that your other loans didn't.
If you choose to extend the life of the loan you will wind up spending more (in interest) than you would have.

Now that we have shown you the pros and cons of consolidating your student loans, you'll want to know if you can get one. To be eligible for federal student loan consolidation, you must meet a couple requirements. You must owe at least ten thousand dollars. You have to be done with college or enrolled in under six credit hours of classes. Last but not least, any defaulted federal student loans must be repaired before consolidating them.

ABOUT THE AUTHOR
Elise Fisher enjoys writing articles that help students understand how to pay for their college expenses and managing her website, About-Student-Loans.com. Make sure you visit the Managing Student Debt page.