Student loans are simply loans taken for post-secondary education, and student loan consolidation simplifies the repayment amount. For example, if you have four different loans that you had taken for four years of your college, keeping track of the monthly repayment and paying back the amount is becoming difficult. You can opt for student loan consolidation. Student loan consolidation replaces the previous loans with a new loan that pays off all the previous loans. In doing so, the repayment amount becomes simple, and the repayment duration increases.
Following are the top five reasons you might opt for consolidating your student loans.
Easier management of the debt
Managing different loans is complicated, and the collective repayment amount can also become a problem if you do not have a steady income or are struggling financially. Consolidating your student loans will make your debt easier by uniting all the loans and replacing them with a new loan with new terms and conditions. Therefore, if you are looking for simpler debt repayment, you should consider getting a student loan consolidation.
Longer repayment term
If you are managing several loans, the reasons you are struggling to manage your debts are; either because of your daily expenses or low income.
As a result, your repayment debt is higher than what you can afford. Student loan consolidation will unite all the debts and increase your time to repay all the debts. The monthly amount that you have to repay will depend upon the amount you have borrowed. The longer the time of the repayment of the debt, the lesser the monthly repayment amount.
Lesser monthly payment
After consolidating your student loans, the amount you need to pay every month to pay off your debt entirely also decreases. Paying off the monthly repayment amount of several loans is higher in comparison to the consolidated student loan. Therefore, you can enjoy playing a lesser amount under the compressed terms than your previous repayment amount, making repayment of the debt more manageable.
Fixed interest rate
Before the consolidation of your student loans, you will pay different interest rates on various loans, but after a merger, your interest rates become fixed because all the loans have been replaced by one loan. The interest rates on the consolidated student loans are the average of all your loans under your education loan.
If you do not have a job that can start paying off the consolidated loan, you can choose to defer the repayment as the consolidated loan resets all the deferment because it is a new loan. The deferment period will vary from institution to institution. Furthermore, if you do not have a job or are looking for a job, you can avail of unemployment hardship deferment and delay your debt repayment.