Very few college students realize the impact of taking student loans until it comes time to repay them. With graduation looming, students first see the full impact of the tuition Singapore loans when they receive their first payment coupon and the truth sets in – now they must repay the thousands of dollars of loans, whether they have a job lined up or not.
When students enter college, the fact is that the process of obtaining a student loan is pretty simple. They only have to visit the Sallie Mae website, check a few boxes and then wait for the funds to be dispersed. If only the repayment process was as simple. Every two out of three undergraduate students walk away with their diploma and some form of student loan debt.
With the access to seven private loans and three federal ones, college students have a plethora of options to get into debt. Upon graduation, student loan consolidation is an appealing option, as it will reduce the burden and help students reduce the total debt that is owed. It can also simplify student’s finances with lower interest rates smaller monthly payments.
Prior to jumping into a student loan consolidation plan, you need to ensure that it will suit your finances and your loan situation. A problem that many students face is the fact that federal loans are not able to be consolidated with private ones. Another issue that is often observed is that as of July of 2006 federal student loans began to carry fixed interest rates. Prior to that, they were offered with variable rats and when they were consolidated students were able to lock in a reduced rate than paying each loan separately.
Since this change, there is no real financial benefit offered to consolidation federal student loans due to the fact that a single monthly payment plan can be obtained, as well as alternative repayment plans, which can be beneficial in many students’ situations, especially when just entering into the work force.
If you are considering student loan consolidation, you should understand that if you cannot make your payments, it is not going to help. However, if you are only having trouble making the payments, and think it will be fine in the future, the consolidation of student loans will provide you with several helpful alternatives.
Keep in mind, that while the repayment plans that student loan consolidation offer will decrease the payment that you have, you will also accrue quite a bit of interest, which can stretch out the life of the loan. Also, once you consolidate your loans, you will not be able to do so again. Therefore, you should try to pick a time when the interest rates are low, this will decrease the amount that you wind up paying.