Debt Consolidation Articles
How Do I Know If I Am Eligible For Student Loan Debt Consolidation
If you're a parent sending your child off to college or if you're a student going to college for the first time, you're probably cringe whenever you receive a tuition bill in the mail--or when you thinking about buying $1000 worth of textbooks for next semester.
As the price of getting a college education rises in the United States, so does the demand for student loans and student debt consolidation services. Whether it be for graduate school or to study abroad, students are accruing massive debts beyond what was reasonable in the past.
These loans already have low rates of interest and flexible pay-back terms because they are specifically targeted to members of society who aren't in the work force; all the same, even with these rates, you may find it troublesome to pay them back on schedule.
Consolidations programs are tailor-made to help students manage their debt and avoid debt default. There are two ways in which these programs will deal with the problem: they'll either lower the principal or they'll eliminate it altogether.
This is actually permissible for all loans where they allow pay-back in terms of specific services or higher education; whether or not this applies to you depends on the type of student loan scheme for which you opted.
If this does not work for you, you always have another option: you can seek the help of a consolidation agency. There are special consolidation agencies that deal with student debt problems.
Basic Types
There are generally two types of student loans: federal and private. If you have taken both, you should never consider consolidating them into a single package. Only federal loans have government backing; and hence, can be refinanced at low rates. It is always advisable to take
all federal loans together, solve them; and then head for the private ones. Private student loans are generally unsecured and charge higher rates of interest than their federal counterparts.
Conditions of Consolidation
There are certain norms that have to be in effect if you want to consolidate your student loan. To start with, you have to be out of school or college and must be in the "grace period" of the loan; or must already be making repayments to avail the facility of a consolidation help service.
If you fit into the criteria, then you should move ahead to the next step, which is talking to the
consolidation company and asking them to contact whoever you owe money to (your creditors) to lower your monthly payments and rates of interest. Just as with any other loan, student loan repayment affects your future prospects of loan-taking.
If student loan debt goes beyond eighty-five percent of your total income, it is seen as a negative score in your future credit assessment. This shows that even student loans have an influence on your future decisions as a borrower.
There are some consolidation companies who may qualify you for additional reduction programs, which not only lower the rates of interest, but also include grace period savings, on-time payments, and automated direct-debit payments.
Beware
Not all consolidation companies on the block are genuine, so be sure the one you apply for is a reputed one with sufficient evidence to support its creditability. Otherwise it will lead to doubling your problems, as fake companies will only add to your already high debts.
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