It is a well know fact that a college education gives a job applicant an edge. Aside from having a considerable length of job experience, education is one of the factors which are given importance by potential employers.Put simply college graduates are better educated and are likely to perform at a professional level. If financial support is what they need in order to get a college education, they take on student loans in order to fulfill it.
A student loan can either be private or federal. A federal student loan in the United States is guaranteed by a government agency and is authorized under Title IV of the Higher Education Act as amended. Because of instances where more than one student loan has to be made, a lot of confusion arises by the time repayments have to be made. When caught in this bind, students can opt to consolidate federal student loans.
To consolidate a loan means that a debtor chooses to combine two or more of their federal education loan into one account. This new loan offers new terms and conditions which are advantageous for the debtor.
When you decide to consolidate your federal student loans, there is no need for several monthly repayments to be deposited into separate loans or accounts. Because the consolidation has rolled the loans into one, only one payment is to be made by the debtor monthly. This will ease the burden out of the debtor's monthly budget. Not only is this option convenient, but it is also a way to maintain a student's credit rating.
Loan consolidation itself gives the debtor lower monthly payments when compared to the combined amount made separately to different student loans. Having only one lender, a debtor can now manage their finances more effectively.
The consolidated program will give the debtor flexible repayment options which will consider the needs and capabilities of the debtor to pay monthly. Although, one must take note that the longer the time of the repayment is, the higher the total amount of the debt will be. This is because interest rates are proportional to the amortization period.
A consolidated student loan can either be subsidized or unsubsidized. Although the two has different terms and conditions, both are guaranteed by the U.S Department of Education either directly or through guarantee agencies.
When a federal student loan is subsidized, the federal government makes interest payments while the student is still in college. This will leave the borrower the same amount of the loan made or without the interest by the time payment starts after the grace period of six months ends.
On the other hand, when a loan is unsubsidized, the interest is included in the accumulated total that the debtor must pay after graduation or after the grace period of six months. With consolidation of federal student loans, the debtors can also retain the subsidy benefits on the loans made.
