Student Loans Consolidation

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Published: 08th November 2012
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The student loans were considered as a huge welfare measure when the American government introduced this facility. Everybody viewed it as a great step. Within no time students became dependant on these loans to complete their college and professional education. As of last count, nearly two third of all students are carrying the burden of some student loans.

We can classify the student loans in two main categories. There are the federal student loans, and the private loans. While the federal student loans are cheaper, they do not fully pay for the education of a student. The private lending institutions give you all the money you need but they have far higher interest rates.

The federal student loans are actually meant to assist an individual and not fully fund his education. It is assumed that an individual will have part of his tuition expenses covered through his personal savings. However, it is an unfortunate dilemma that the reliance on the student loans has reached a stage where all the expenses are covered through loans of various types.

The average a graduating student owes more than $20,000 in student loans. The origin and starting time of these loans is usually quite diverse. However, their pay back time is about the same i. e. six months from the date they graduate. This simply means that the student will be liable to start paying back these loans at the same time. This presents a minor crisis to the borrower.

The current scenario in the job market is not too rosy. For the past many years the unemployment rate is hovering around 8%. Due to a slow consumer market, the factories have to regularly down size their staff. Absence of a steady job makes it difficult to start the repayments as they fall due. You start thinking that refinancing is the only choice that you have to manage your loans.

You may be looking to refinance the loans to get more money to improve your education. Some people go for refinancing simply to benefit from the easier mode of payment.

Loan refinancing is not an easy subject. The ever changing rules on this subject have complicated the things to quite an extent. One thing which has remained unchanged through all these years is that federal and private loans cannot be consolidated together. You can put all your federal loans in one place. If you chose the right time to do so, you could be saving thousands of dollars in shape of lower interest.
Some of the private lenders are also willing to consolidate your loans together. Usually they charge a higher interest rate for providing this facility. So refinancing your private loans can cost you an arm and a leg. Since you will be paying a high interest rate on your loan for the twenty or thirty years period, the amount can total significantly.

Before taking a decision to consolidate your student loans you must understand all the repercussions. Your decision is going to have far reaching results for you and your family. Here are some guidelines to help you make up your mind.

The simple rule of thumb is to judge if the refinance option is the only one to combat the situation. If by depriving yourself of certain luxuries, you can avoid refinancing, then you must make the sacrifice. Just to refinance the loans for the ease of payment is also not a very sound strategy. My suggestion is always to go for refinancing if you are likely to default on your payments.

Justine Headley presents to you the pros and consof getting your student loans refinanced. Refinancing always costs but you can save money by doing at right time. So before you take a decision, visit http://freestudentloanadvise. com/ to avoid any unneccessary losses.

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