The importance of education cannot be overstated but as situations change it may be necessary to attempt to make any student loans more manageable by consolidation. There is a lot of information available to help in deciding how to consolidate and to help in the choice of financial companies that have products specifically designed for this purpose.
Consolidation of student loans can reduce the repayments by either bringing together several loans or by spreading out payments over a longer period. Of course it may simply be that there is a better deal available now than when the student loan was originally set up.
Take financial advice
The services of a financial adviser should be employed before any major decision but it is also good advice to first be well researched to understand some of the options available in the market.
The downside to student loan consolidation
Although consolidation can greatly relieve the burden of debt, it must be understood that it is likely that the overall repayment of capital and interest is likely to be larger than the combined amounts for the current loans. This is not necessarily a concern but it is a serious consideration before the loan consolidation option is discussed. If monthly payment relief is not needed, then compare of the cost of repaying the unconsolidated loans against the cost of repaying a consolidation loan before making any final decision.
Consider any benefits that are part of the original loans
The process of consolidation includes paying off the original student loans and starting a single new one. Many loans have benefits included when they are first arranged such as discounted interest rates or a period of fixed rates. There will likely be a penalty for early repayment of these loans and if consolidated, this amount would need to be included as part of the original debt.
The consolidation process is irreversible
Once the student loans have been consolidated they cannot be separated again. The original loans are repaid and a new single loan will be set up.
Early consideration of consolidation of the student loan
It is good advice to consider consolidation before getting into serious problems with the repayments. If the loans are in default then there will likely be extra conditions that must be met. Combining or rearranging loans is a great way of helping to reorganize monthly outgoings but it may be too late if the repayments have got too far behind. It may still be possible as part of the package of recovery arranged by a financial adviser however.
Consolidation of Federal Education Loans
Federal student loans are treated differently from private loans. For information about consolidating this type of debt visit:
Services from the local bank
Many of the larger local banks provide consolidation services. These do not usually allow the inclusion of federal loans and so if these are part of the debt then the official government site should be visited for information. An example of a local bank service can be found at:
Online services including repayment calculator
Much research on how the consolidation process will be carried out, can be found at the many online financial services web sites. Many companies cater especially for the student in the assistance of loans and credit cards and also provide answers to the frequently asked questions about loan consolidation.
Companies like NextStudent have excellent websites with a host of information.
This site includes a useful loan calculator that can be used to calculate the final monthly payment on the consolidated loan taking into consideration all the outstanding amounts on the current loans. Note that this particular site also has a loan comparison function so that different options can be considered.
Research the options then see an adviser
Student loan consolidation is worth considering at any time, even if there is no financial difficulty. It may provide a much better opportunity than the current individual loans. There is much information on the internet that can assist the initial decision as well as help understand the options provided by a financial advisor.