Student Loan Consolidation By Jaju Girish At Isnare.com Ezine Articles

Student loan consolidation simply means consolidating all your student loans into a single loan with a monthly payment plan. Effectively, all your previous student loans are written off and a new student loan is created which you have to pay off monthly.

A few of the benefits of consolidating your student loans are lower monthly payment, make only one payment, lower/fixed interest rate.

There are mainly two types of Student Loan consolidation programs out there. You will need to choose the one that meets your financial needs.

Federal Student Loan Consolidation is offered by the federal government and at a very low interest rate. There are many types of federal student loans available. A parent-plus loan is offered to the parents of the students. A Stafford loan is backed by full faith of the US government. Perkins loan is need based student loans.

Private Student Loan Consolidation is offered to the students from private finance companies. These loans offer higher loan limits than the federal loans and offer no re-payment until after graduation with a grace period of about 6-12 months. The private student loans can be disbursed directly to the school (also known as direct-to-school loan) or to the student directly (also known as Direct-to-consumer).

There are four different types of Student Loan Debt Consolidation plans. A standard repayment plan offers a maximum 10 years to repay. An extended repayment plan offers re-payment period of 30 years. A graduated repayment plan is also 30 years but the payemnt increases every two years. An income repayment plan is based on student and family's financial situation.

A federal loan does not always cover all the costs. The companies that offer private student loans suggest that they combine the best elements of government or federal loans into one. A higher loan limit ensures the student has no budget gap.

Everyone's financial situation is different. A loan that is beneficial for someone else may not be as good for you. You should give a carefully examine your financial status before choosing a company.

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