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Student Loan Consolidations
What are Student Loan Consolidations?
Consolidation in bank lingo means to rearrange the structure of a persons loan to minimize cost and maximize the ease of which one can pay back his debts. In practice this means that if you have a debt toward the cable company, your internet service provider, your credit card company, your phone company and you haven't paid for electricity in while your not in a good situation. First of all a lot of your disposable income is spent on loans. Secondly, you have to keep track of how much to pay to who and when. Especially with organizations this may become quite a pain. Through a consolidation process the bank will pay all your debts for you in turn for you paying the bank. What this means for you is instead of having 5-6 debts you have just one. Tread softly though because in theory you still have those debts, if the bank is late on a downpayment (apparently this has happened) it's your problem, not theirs. This said consolidation may bring you a favorable maturity and a Lower interest if your lucky
Student Consolidation Loans
Student consolidation is a bit different partly because the state has a major part in it and partly because we are talking about students. It is essentially subsidized like any other industry. Students are special because to pay their tuition they may have to get hold of a loan and anyone can see that being in a debt situation because of this is not the same as being in debt because of the new plasma screen you just bought. To be a ready and able presence on the market students should be nudged little bit, it's not as though they got loans for free anyway.
Special applications are definitely needed to prove student identity. What students get is a better interest rate and possibly maturity. Student are also in a good position because they have clean credit reports. They probably don't have any issues with banks of being late with payments. This enables them to receive interest rated as low as 4.5% but it also limits what they can consolidate. Possible loans that are eligible are Federal Subsidized and Unsubsidized Stafford Loans, Direct Federal Loans, Federal Perkins Loans, Health Professions Student Loans (HPSL), etc.
Consolidating loans usually also gives a lower monthly payment to the students, possibly even a third of what they would normally pay. The amount you consolidate isn't indifferent either, a larger amount unusually gives you a longer maturity, so consolidating $10.000 worth of debt may have to be repaid in 10 years, but $60.000 can be repaid over the course of 30 years. For people after their college years and out of the debt grace period it may be useful to know that most of you can deduct the interest paid on Federal loans from your taxes too!
Some governments offer different kinds of help to students. They may be able to receive special student loans in the first place. This could mean that they get a monthly payment of $300 and don't have to pay a dime back until they start working. Then, the sum is deducted from their salary gradually, perhaps, 8-10% every month. This method is not a consolidation method, although it does share some features of it.