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Student Loan Debt Consolidation: Debt Consolidation 101 |
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When we speak of student loan debt consolidation, all the
student loans will be consolidated into a single loan which is called the
student loan debt consolidation loan.
With this loan, there is no need of keeping track of all the
individual student loans, and to make payments to all these loans. Instead,
only a single payment is made towards the student loan debt consolidation loan.
Types of Student Loan Debt Consolidation Plans
There are 4 different types of student loan debt
consolidation plans available from lenders each with its pros and cons.
- Standard
Repayment Plan: Standard Repayment Plan offers a maximum of 10 years to
repay your student loan debt consolidation at a fixed rate. Payments are
calculated by dividing the loan amount within that time period at a fixed
interest rate.
- Extended
Repayment Plan: There is also the option of an extended repayment plan. It
is the same as standard repayment plan except it stretches the repayment
period to a maximum of 30 years.
The length of repayment is dependent on
the total amount borrowed. You should note that you may ended up paying
more by opting for an extended repayment plan because of the fixed
interest rate.
On the other hand, the monthly payments would be easier to
handle so you will have to decide how much you can afford to pay each
month.
- Income
Repayment Plan: For income repayment plan, the monthly payment is not
fixed. Rather it is determined by several factors such as your total
student loan amount, the size of your family and your income level. The
maximum repayment period is 25 years.
- Graduated
Repayment Plan: The Graduated Repayment Plan has a maximum repayment
period of 30 years which is the same as extended repayment plan. However,
the amount of your monthly payments will increase every two years.
Obtaining a student loan consolidation is often the first
step in a financially secure life. It always makes sense to reduce total debt
while lowering your monthly payment. Most all of the new programs are offered
by online lenders.
This also makes applying for these loans a snap. In most
cases an application can be filled out in a couple of hours, in the privacy of
your home.
By shopping for your loan online you can also take advantage of
looking around for the options that suit you best. These new rates will
probably not last long.
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