There are several college students around the world, who are relying on loans to complete their education. There are more than 16 types of loans, and you can use them for enlightening your future. Every loan has its own set of criterion, interest rates and bills.
You have to pay the loan with its interest semester wise, or quarter depending on your loan. It is always a tough task to keep tabs on loans, and check the exact amount per month. Consolidating loans would make the entire process smooth, and change multiple loans into one loan. This process is not that simple, and you need to consider some factors before finalizing the decision of consolidating loans.
Factors Before Finalizing Consolidate Loans
Owing factor- You need to check several aspects, other than just the loan balance. You need to understand the type of loans you have selected. As per analysis carried out by National Student Loan data System, there is a hidden factor, depending on the type and the date of the loan.
Majority of the borrowers around the world has a combination of subsidized, and unsubsidized loans. Interest rates change every year, and you need to check with the loan servicer (who sends your statement every month) to find the exact value of the loan rate, and see if it is fixed.
As per consolidation loans, the interest rate is the average rate of the entire loans being consolidated. If you have more small interest loans, than the latter’; you would end up paying more interest over the years. There are some cases, where interest rates can go much higher, if they are added together.
Borrowers should also consider, whether their loans should be from the federal government, or private lenders. Federal loans would not allow you to consolidate with private loans due to their policy. However, private lenders would be more than happy to consolidate with government loans. Additionally, it is never a recommended idea, and you should never consolidate private loans with federal loans.
Benefits of the Loan-There are several benefits of the Perkins loans, which you will not get in private menders. If you consider the Perkins loan; you will get a valuable option of carry forgiveness, which is not available with Stafford or Plus loans.
There are several advantages, a graduate can get, if they join law enforcement, Peace Corps, Military officer, and Science teacher. Graduates joining the above options are eligible for 100% of a Perkins loan forgiven. However, the Perkins loan can get void, if they are consolidated with other loans.
Alternatively, consolidation helps borrowers to be eligible for the forgiveness options like the Public Service loan program, or Pay-As-You-Earn Repayment Plan.
Easy Process Doesn’t Guarantee Savings- Consolidation can simplify the process of combining several loans into one loan and single payment. However, this is not the only point graduates should consider for the loans. A simple tracking of records can never justify this option. You can also use the automatic debit feature to simplify the process.
Initially, several borrowers find it easy to track, and pay their payments, but they end up paying a huge amount. You will have to pay a higher amount over the years.
Consider Short-term and long-term – Graduates should avoid making decisions based on their present financial circumstances. Graduates knowledge, skills and financial condition will improve over the time.
If the graduates think their initial salary will be low, and continue to rise over the years; they should consider income-based repayment.
Consolidate Graduate Loans in United Kingdom
Majority of the graduate loans in the region are provided by the state-owned Student Loans Company. As soon as the student receives the amount, the interests starts with the loan amount. However, the repayment is to be done after the student complete the education. Additionally, the repayment can also start, if the student leaves the education.
In United Kingdom, the repayments are collected on the basis of borrower’s present income. The borrower’s income is judged on the basis of threshold limit, which is £15,000 per tax year for 2011/2012, £21,000 per tax year for 2012/2013. If the borrower’s income is less than the amount mentioned above, no repayment is required, and only the tax is to be provided.
Loans are liable to be cancelled, if the borrower is dead, or unable to work due to specific circumstances. The rules are different in the entire UK, and it varies according to the region. Additionally, the loan can also get cancelled, if the borrower reaches a certain age, or a duration of 30 years.
Consolidate Graduate Loans in United States
In this region, the loan is provided either by the Federal Government, or Private Student Loans. Majority of the students prefers loans provided by the Federal Government, as there are chances that the loan can be forgiven. Students are also provided with a financial aid package, where the package includes scholarships, grants, and work opportunities.
Federal Students loan are more preferable to students, than through the private lenders. This scheme is a huge bonus for the federal Government, as they get a huge sums of interest from the people, and their investments is really less. Alternatively, the losses are really low, even if the borrower is unable to pay the amount due to any circumstances. Private lenders earn profit from the people, and hence benefit the state Government.
Consolidate Graduate Loans in Australian
The loan is good for students to provide them with a new laptop, a car, or even a holiday. A Borrower does not have to pay any sort of repayment for the first year of the loan. However, the borrower must be an Australian resident. Students are free to increase their repayment, at any given time. This would allow them to complete the loan faster, and get benefit with the interest’s costs.
The interest rates is generally 13.68% p.a., and there are always a chance of special discounts. A $150 amount is charged as an approval fee, depending on the institution. Additionally, the rate changes with the amounts, and you have to check with the institution for the exact amount of processing charges.
Lastly, the consolidation of the loan is a boon for recent graduates, who have limited income. Recent graduates had just started their path, and they have a huge burden on their shoulders. A good job can take up good time, and a long duration consolidation loan is best for them. However, a reality check on the budget is extremely important, as there are strong chances of bankruptcy.
Consolidation loans should be started after 5 years of education, as a good job would be on your door steps, and you will have a good sum for disposal. However, there is fluctuation in the rates depending on the strength of the market.
A good consolidation program is not tough to find in the present times, and there are several documents, and information available in the Internet. You would also find several lenders, and institution providing their services online. A private lender would provide you easy access to the loan scheme, but the rate of interest is high. You should also understand your present debt, and the amount you can pay in the coming years.
