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For
college students and graduates with multiple student loans, the student
loan consolidation program provides an opportunity to make repayment
easier. However, before signing on the dotted line, it's important
for students to understand some basic facts about consolidation.
Student Loan
Consolidation Program: What it does
The student loan consolidation program allows borrowers to combine
outstanding student loans. For example, if a student has three separate
government student loans, the student can consolidate them into
one single loan. Technically, all three of those loans will be considered
paid in full and a new loan will be started in their place.
Student
Loan Consolidation Program: How it helps
Consolidating loans through the student loan consolidation program
is beneficial in three ways. First, it's more convenient. Students
with multiple loans also have to make multiple payments every month.
That means there's more paperwork and due dates to keep track of and
a better chance that one of them won't get paid. With consolidation,
there's only one loan payment due every month instead of two, three,
etc. That's usually easier for most students and graduates to manage.
Another benefit of the student loan consolidation program is that
it may save students money. For example, a student with three outstanding
loans may be required to make $150 payments each month to all three
lenders. That's a total of $450 per month. After consolidation, only
one payment is required and that payment is usually much less than
the combined payments from all of the loans. That can be a huge benefit
for students who are just getting started in their careers and who
don't have the income necessary to cover large loan expenses right
away.
Finally, consolidating loans
may open up additional opportunities for students. They may be given
new deferment choices and/or more repayment possibilities. This added
flexibility can come in handy for students wishing to continue their
education even further, struggling to find employment in their field,
or experiencing financial hardships.
References and Links
To learn more about the student loan consolidation program, read
"Lock
in Low Student Loan Rates" or visit the Federal
Direct Consolidation Loans Information Center.
Additional information is also available in the articles "Government
Student Loan Consolidation" and "Student
Loan Consolidations".
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