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For some, consolidating student loans is a great approach to gaining valuable control over significant debt. For others, the prospect of consolidation is a bit shaky and certainly no avenue taken lightly. If you would like more information about consolidating student loans, read on as we cover the basic aligns of this often beneficial option in personal debt management.
What is Consolidation?
First, let’s be sure we’re clear as to what consolidation is as a general subject. Also often referred to as debt consolidation or loan consolidation, consolidation is the act of joining together multiple debts into one, singular debt. An example would be taking three loans and putting them all together as one loan with which to work with and pay off. Generally, a new lender would step in here and buy-out the debts from the previous, multiple lenders, thus taking on all debt under a new total debt account.
Why Consolidate?
There can be many reasons for one to want to join multiple debts together into a single debt in such fashion. One reason is to simply make things more manageable. By having one debt, one servicer of that debt, and one set of terms and conditions to understand, things become much more manageable.
Others consolidate so as to get better terms on the overall debt. An example of better terms could be found in lower interest rates or fewer penalty events stipulated against a balance. Yet another reason some take this approach is to simply be rid of creditors with which they do not enjoy dealing or have had a history of unpleasant interactions. Even more reasons to consolidate could be found if one were to survey the many, diverse debtors out there.
School Loan Consolidation
Now, as to the direct subject of educational loans, the reasons to choose the consolidation option can be much the same as found in virtually any other types of loans. The next question, though, becomes a matter of how. How does consolidation work in the area of student loans specifically?
First, you need to know what kind of loans you have. Are they from private lenders, or are they from the federal government? If private lenders are involved, things can, unfortunately, get a bit difficult here. This is because fewer and fewer private lenders will get involved in taking on consolidated lumps of debt involving educational services paid for by other private lenders. The few remaining that do provide such consolidation then typically require the applicant to satisfy some rather strong qualifications in the areas of credit, personal history, current finances, and more. As a result, finding a private individual rather than a bank to help take on the debt is often a better bet.
If your loans are with the federal government on the other hand, you are likely going to have more options. In this situation, one can simply apply for the government’s Direct Consolidation Loan. This is a free application that forwards your desire to consolidate to the federal government as well as a group of carefully associated private lenders. You will then be contacted by the appropriate parties in order to review consolidation offers available to you.
Consolidation is an important consideration that can really provide benefits to the student in debt to educational lending. At the very least, it is an option worth exploring for nearly any student receiving or considering receiving such lending. In conclusion, the very best information as well as the direct links to get help with consolidating student loans can be found at the federal student aid website.