Student loans are loans meant for students only and they have unique payment terms. These loans are offered by the government and private student loan companies. You are supposed to use them to pay for educational expenses at a low interest rate. They are provided in two forms – federal student loans and private student loans.
Federal and Private Student Loans
- Private student loans are those that are offered by certified private financial institutions such as banks. They are usually taken as supplements on top of other government financial aids. Education is costly and government aids cannot be enough. Your lender will calculate the interest and fees for you based on your credit ratings. They will look at the financial status of your parents and also look at other financial factors. With this, they will be able to come up with the most appropriate figure for you.
- Federal student loans are offered by the government through the Education Federal Aid Programs department. The aids associated with this department include educational grants and scholarships. You will benefit from the flexible repayment options that also allow you to defer. Other benefits of the loan are low fixed interest rates and reasonable discounts. The package from the government is also determined by your needs as a student.
When you fail to pay your student loan
- Failure to pay back the loan may affect your credit profile and also have an extended effect that may hinder your future access to financing options. When in such a state, you should consider advice from student loan consolidation companies working with us. Consolidating your loans is the best way to come out of your deteriorating credit profile. The companies will offer you their services without performing stringent checks on your credit history.
- The companies will help you reduce your monthly loan payments and let you save more. However, when consolidating, your federal and private loans will attract different terms with regards to payments method and interest rates. For instance, you will only manage to consolidate your federal loan if you are already done with your education. On the other hand, private loan consolidation does not depend on your status. This means that whether you are still in college or not, you have an obligation to repay the loan according to the terms you have agreed to.
Benefiting from student loan consolidation companies
You can achieve your consolidation goals by consolidating them separately. Start by consolidating your federal loan first then followed by your private loan.
- Savings in the short term: for you to gain from a consolidation plan, you have to have a long-term loan. This means that you will be taking out a new consolidation loan with a longer term and use it to pay for your private and federal loans. This is a step that can significantly reduce your monthly payments.
- When settling for a long-term loan, your only worry will be the more cash you will have paid at the end of the cycle. Consolidation companies will help you out when you are not comfortable paying the monthly deductions for your student loans.
- The consolidation companies you find with us will advise you to settle for the minimum time span and also consider the lowest monthly payment possible. However, you are not limited to your deduction; you have the liberty to pay more. When you do a calculation, you will realize the significant amount of money you are actually paying when you choose a very long payment plan.
Qualifying for a student loan consolidation
Qualifying for a consolidation loan as a student is much easier as compared to qualifying for a traditional loan. Whenever you realize you are not going to be able to pay your student loan on time, you should quickly consider the consolidation option.
- Your credit rating will play an important role, especially when the company is setting your interest and loan terms. Before you start searching for a student loan consolidation companies, check your rating first. A better credit rating will ensure that you qualify for more flexible terms.
- You can still qualify for a consolidation plan even if your rating is not that good. The challenge will be more limitations and slightly higher interest rates. Generally, consolidation will help you save more on your monthly payments.
What to do
Remember that both federal and private student loan consolidation companies work to achieve similar objectives. Even though the latter tends to be more difficult, it is possible. Just be on the lookout for the timing, credit rating, your lending company and the loan amount. Assessing these factors properly will ensure your make the right decision on how and when to consolidate your student loan.
- Check your credit rating: this is an important step, especially for your private loan consolidation. Private companies are keen on your credit score. You can get your credit report free-of-charge by requesting it from one of the credit bureaus. You will then be able to know your exact credit score and then find out which company lists your score as a requirement.
- Search and compare the companies: you will realize that most students go for private lenders. However, this is not the only option you can find. You can also choose unions and banks for consolidation services. With several options like the ones available with us, you can effectively compare.
- Conduct and evaluate the terms and conditions: ask your lender all the necessary questions about the payment methods, penalties, interest rates and any other fees. This will ensure you stay clear of what is expected of you without any surprises.