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Student Loans - Save Money, Pay Less, Spend More
By Rick Braddy, Sat Dec 10th
Save Money, Pay Less, Spend More on What You Want? Sounds toogood to be true, doesn't it? Well, if you'll spend a few minuteslearning about student loan consolidation, you'll soon be armedwith enough information to make some really good decisions andhelp you achieve all of the above, and more. Student loans are available to students (and parents) in need ofhelp with living costs while studying and working on a degreeprogram. For many students, student loans are their largestsource of cash and income (in some cases, their only source).What often happens, is students acquire multiple student loans,then begin to have cash flow problems, which leads to charges onone or more credit cards. These credit cards are typicallyissued with very high interest rates, often 20% or higher. Thisis a severely problematic financial trap, and a very tough wayto get started in life for a young person who is still in schoolor just about to graduate. So, how does student loan consolidation work anyway? Well,unfortunately, too many students leave college with debt thatweighs them down heavily, burdening their lives with debt thatwill haunt them for many years
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to come. More often than not,students accumulate multiple loans from various lenders. Thisleads to multiple payments each month, and often several loanswith unfavorably high interest rates.
Loan consolidation allows students to combine multipleloans intoa single instrument, one loan from a single lender. In effect,this is like refinancing a mortgage or credit card or other debtconsolidation - multiple debts reduced to one. The balances ofthe multiple loans are paid off by the loan consolidationlender, and voila' - a single loan payment at a more favorableinterest rate. Translation: lower monthly payments, lessoverhead costs for the borrowed money, and more immediate cashflow to spend on more important items today. A student should seriously evaluate consolidating loans if theconsolidated loan would result in a lower interest rate that thecurrent student loans, especially if the student is strugglingto make multiple student loan repayments. Often times, the merged loan includes a more flexible set ofrepayment options, plus no charges, fees or prepay penalty. Insome cases, there may even be no pesky credit checks, loancollaterals or cosigners involved. Student loan consolidation can reduce payments up to 60 percent(actual amount saved will depend upon the existing loan interestrates). The other factor is the term of the loans. Typical loansare for a 10 year term. When consolidating student loans, itspossible to refinance for up to 30 years (like a home mortgage).It's important that there be no prepayment penalties, since thestudent will likely want to pay these loans off much sooner,once their earning power is improved after graduating andprogressing in a career that pays reasonably well. Of course,the longer the loan period, the higher the interest rate, andlower the initial payments, which frees up precious cash flowwhen it's needed most - while the student is in school. So, if a student has multiple loans, typically in excess of$7,500 total, there are many benefits of looking seriously at astudent consolidation loan. It's a great way to free up cashflow, pay less each month, and save money while in school. About the author:Rick Braddy is an avid writer, Texas Holdem poker player,professional software developer and marketer. His loanconsolidation website provides students and parents with awealth of free information on student loan consolidation that helps young people throughschool.
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