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Consolidate Student Loans

According to a College Board Study done in 2008, two out of three undergraduates who graduate successfully from college have some form of student loan debt. The reality of paying back this loan amount truly kicks in when you graduate, and you come face to face with this fact that you’ve to pay several loans all with confusing dates and payments.

To make the process less complicated, many people choose the option to consolidate student loans. By consolidating student loans, you may end up with two consolidated student loans: consolidated federal loans and consolidated private loans. Unfortunately, it can’t be made simpler than this as private loans can’t be successfully consolidated with federal loans. The process that should be followed to consolidate student loans is to take care of federal loans first and then move on to the consolidation of private loans.

Private Loan Consolidation

The way to go about to consolidate private student loans is to meet up with financial organizations specializing in this venue. The trick is to choose those with variable interest rates, no origination fees, and no prepayment penalties. Prepayment penalties shouldn’t be there as there are chances that you may end up with a great job and want to pay your loan back earlier than the agreed payment plan. The advantages of private loan consolidation are that you end up with a single private loan with a longer payment plan, which means less payment amount per month.

Moreover, consolidated student loan rates may be lower than the rates at which you took out the initial loans; this is because your credit history may have improved while being in college and after graduating, and also by getting a good job.

Federal Loan Consolidation

The key advantage of consolidating federal loans is the extension in payment plan. Your payment plan may increase from ten years to thirty years with less payment each month. There are no fees for federal loan consolidation and penalties for paying back your loan earlier. Also, there are great chances that you may end up with a lower interest rate.

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