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Friday, November 28, 2008

Personal Student Loan Consolidation: Why to Choose It

By William Blake

A rather large percentage of recent college graduates as well as current college students have many very real concerns to consider regarding their often excessively high student loans. Paying back money borrowed through student loans put an added stress on individuals who already have to pay for necessaries like rent, mortgages, car payments, and taking care of family members. Personal student loan consolidation is one way in which people can ease the burden of paying off their high cost student loan debts.

What is Personal Student Loan Consolidation?

It is important to know that personal student loan consolidation is another loan. Whether you have a private or federal student loan, after consolidating you are basically getting a new loan that pays off your multiple existing loans. Basically you are trading many bills at the end of the month for just one with personal student loan consolidation. You don't need to be experiencing a financial crisis in order to consider a personal student loan consolidation, rather consolidating your student loans can help you simplify your life.

Benefits of Consolidating

Besides making the entire process of paying back your student loans easier, personal student loan consolidation may cause your monthly payments to become lower. This is owing to the fact that your new consolidation loan may very well be charged a lower interest rate than your previous student loans had been charged. That lower interest rate will let you save money that can be invested or used to pay off your consolidation loan faster.

Drawbacks of Consolidating

As with any financial situation there is always a downside you need to consider. Before you sign up for personal student loan consolidation you also want to consider a few drawbacks to this option. Even if you see a statement saying you will get lower monthly payments don't assume this means that you will be saving money. Rather you may find out it is just the opposite if you sign before considering the fine print.

If the term of your loan is exceptionally long, such as thirty years, you could wind up paying lots of extra money in interest charges. A shorter loan term will save you money.

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