Friday, February 27, 2009

Why Consolidate Student Loans ?

By Norman Harris

Consolidate student loans as early as possible. This will help you get your finances in order and avoid the confusion that comes with multiple student loans. The last thing you want is a bunch of paperwork from different lending institutions.

To pay off your loans as quickly as possible depends on the amount you owe. When you consolidate students loans, paying off your debt is simpler depending on the repayment plan selected and the amount you owe.

Consolidation Loan agencies will provide you to access of many option repayment plans for you student loans. These alternatives consist of extended repayment, income contingent repayment and graduate repayment.

The alternative repayment plans depend on how much you owe and the type of loan youre dealing with. In general, most people choose the ten-year repayment plan if other long term repayment plans are not chosen.

When you do decide to consolidate student loans, this will reduce the amount you pay for the monthly payments. This however can extend the term of the loan. Federal loans in general offer and extension to the 10 year repayment plan. It all depend what you owe on the loans and you can extend the term of the loan up to 30 years.

When you extend the repayment period you are lowering the monthly payment amount. This makes it easier to meet the deadlines each month. On the flip side, by extending the term of a loan the total amount of interest to be paid over the lifetime of the debt is increased. In other words, you can pay more now and spend less in the long run, or you can make smaller payments for a longer period of time and spend more in terms of interest when all is said and done.

It is generally advisable to go with the standard ten-year plan when you consolidate student loans. You can usually save some money this way. The alternate repayment plans call for lower monthly payments, but you will end up shelling out a lot of cash on interest for a longer stretch of time if you are not careful.

Be sure to do the research on consolidating your student loans and also check on the ten year plan. Do this, and everything will work out.

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