Over the last decade, there’s been a shift in thinking towards higher education. Offering numerous key benefits to students and adult learners alike, it’s been heralded as one of the best, most sensible decisions a young person can make. Higher education is often thought of as a career necessity – an important idea that gives young, budding professionals the skills needed to succeed in life.
But it’s also a major financial burden – one that’s being carefully examined today in the face of ever rising student fees and tuition costs. From the burdensome cost of paying your way through college to a job market that isn’t exactly friendly to students, many of the future’s star professionals can find themselves in a state of financial desperation once their loans run out and ‘real life’ kicks in.
It’s not an uncommon situation – in fact, it’s one that affects an estimated fifty percent of all college and technical school students. Burdened with debt from their years of learning and unable to find an advantageous position to repay their loans, they look to alternative options for simplifying, reducing or even eliminating their loan balances. One of these options is student loan consolidation.
Student loan consolidation, and loan consolidation as a whole, in fact, is the practice of combining a selection of different student loans – often federal or private loans – into a single larger loan. This is done by taking out a ‘consolidation loan,’ which is subsequently used to repay the other loans over a period of time, with the larger loan carrying a relatively low interest rate, and thus lower costs.
There are numerous advantages to this type of scheme, the first of which is the lower interest rates that a large, long-term consolidation loan carries. While student loans aren’t particularly high on the interest rate scale, student loan consolidation quotes often provide significantly better value. It’s an easy option for many – take the lower interest rates, and enjoy substantially lower repayments.
Then there’s the relative simplicity of using student loan consolidation. While balancing multiple loans is a tough and stressful process, taking care of just one student consolidation loan is a fairly simple task. There’s less paperwork, fewer time-related overheads, and a significantly easier loan repayment process. As a professional, your time is important – using this type of loan protects it.
Finally, there’s the longer repayment term, yet lower overall costs, of a student consolidation loan. A standard loan may need to be repaid over the short-term in order to lock into lower interest rates and other benefits. A student consolidation loan, while for a longer period, may be able to be paid off at a more casual pace, ignoring the often harsh penalties for making late loan repayments.
It’s important to note that while there are many benefits to consolidating your college-related debts, there are several key disadvantages too. These include the higher overall cost of consolidation – an occurrence that can vary from one student loan consolidation quote provider to another. There’s also the management of two loans, which is required for students with both public and private debt.
Public debt – Federal student loans, funding programs, and other government-backed student loan programs – require their own consolidation loan, often one that’s backed with a relatively low rate of interest. These loans are fairly popular, with over half of all college students using funding from the government to finance their education. As such, these loans are cheap and widely available.
Private debt, on the other hand, is debt from a private lending institution, or a specialist college loan lender. This debt is not government backed, and typically carries a slightly higher interest rate than public loans do. However, it’s available in large amounts, allowing students that didn’t qualify for a public loan, or would require more cash than is available, to benefit from private college funding.
Since this is a different type of debt, it requires a separate student loan consolidation quote, and also a separate interest rate. Consolidating various private student loans, whether from a large lender or a small college-related lender, is typically slightly more expensive than consolidating your Federal loans. This is due to the slightly higher interest rates, and the shorter term of the consolidation loan.
Finding student loan consolidation quotes is a fairly simple process. Online, it’s just a simple search within either your local area’s banks and loan consolidation providers, or the entire nation’s financial institutions. Almost all leading finance companies provide a loan consolidation service, with many of the top banks and lenders offering competitive rates to students and recent college graduates.
Offline, it’s often an even easier process. By speaking with a representative at your local bank, credit union, or lending agency, you can learn more about the process and costs associated with student loan consolidation. Alternatively, you can speak with representatives from nationwide consolidation companies over the phone, securing quotes and other important information.
While student loan consolidation isn’t for everyone, it’s a service that can help many college grads find their financial footing in the professional world. With a job market that doesn’t appear to be all that healthy in the short-term and a great deal of college students awaiting graduation, a long-term option like student debt consolidation could be a very advantageous solution.