Student
Loan Consolidation.

The student phase of life is one of the
toughest periods. Most students work to support themselves. They take loans,
max out their credit cards and still find it difficult to make ends meet. One
way of reducing student loan payments is to consolidate student loans.

Federal
student loan borrowers.

There are sites with a special offer to help
reduce the monthly student loan payments. This will free up some cash. The good
points are to lock in low monthly payments with a fixed interest rate, bundle
all similar federal student loans into one loan, no extra fees and easy sign up
online. 

When you do student loan consolidation, you
are granted more time to pay off your debt, to the tune of 20 years. You may
like to use any student loan consolidation calculator to do a quick computation. 

You might check out this site for actual applications.

Student
Loan Consolidation will work for the student when there is responsible financial borrowing.

As soon as a student or anyone obtains a
credit card, even a first credit card, they must safe guard against spoiling
their credit score.  This means that they
must not spend over the limit, forget a credit card monthly payment, or apply
for a new credit card. The credit score is crucial as it determines how much
money you are entitled to borrow on credit.

Student
loan consolidation works with good planning. At
each semester, draw up your own budget. List down everything you can think of
and add some pocket money fro your weekend budget.  Next, list down your income.  Now, try to balance these two columns. If you
spend more than your income, you need this minimum amount as a loan.  Should you need to borrow, do so only for the
minimum amount. Bear in mind that the more you borrow now, the more you have to
repay in the future.

Before you
need to apply for student loan consolidation, you need to fight bad debt. Never
use the credit card more than you really, honestly need to. Whatever money you
borrow on credit needs to be repaid. 
Every instance you apply for a new credit card because you’ve maxed out
the previous one, it reflects on your credit score negatively.

You need to pay off the card balance at the
end of every month. The balance should not exceed half your allocated credit
limit. Otherwise, your credit score will be affected.  That is why you should never max out your
cards before applying for a new one.

Owning a credit card does not mean you have
to use it. Even when you pay for small purchases, it adds up and you’ll have to
pay interest on top of that.

It is better to save real cash money to buy
a big ticket item than to freely spurge on credit.

Credit cards are not student loan
consolidation. They do not care that you’re a student and can’t pay
up.  There are no safety measures like
deferment or forbearance options.  A
student loan has these options because it makes provisions for students.

Before you even think about student loan
consolidation, take advantage of scholarships and grants. This is a very
precious category that gives you free money without the obligation to repay the
capital.

After scholarships and grants, look for
federal student loan choices. These may offer cheap, low interest loans to
students and parents who have dependent undergraduates. These are the Federal
Perkins Loans, Stafford Loans, PLUS Loans and Grad PLUS Loans. These special
loans have low, fixed interest rates, no application fees and no prepayment
negative penalties. The student can also delay payments until after graduation
or when the student works part time.

The last resort to help is the Private
student Loan. However, Federal student loans are cheaper than this category so
this Private student loan should be used after every other option has been
explored.

Before filling in any application for a
credit card or loan, you need to be clear on what is the best choice for your
needs.  You have the right to get the
best deal.

The advantages of Federal loans:

1)     
Extended, income sensitive and
graduated repayment plans

2)     
Lower monthly payment

3)     
Help make repayment more
affordable.

4)     
Deferment option is available.

5)     
Forbearance option is in.

What to avoid:

1)     
Keeping away from your lender
when you have trouble with the monthly payment.

2)     
Stop making repayments as each
time you miss a payment, it will lower your credit score.

3)     
Risk that your student loan
goes into default.

4)     
One default loan could cancel
your chances of getting any other new loans.

5)     
Defaulting on a federal student
loan means the government can garnish your wage and deduct some money out of
your monthly paycheck to service the loan.

The advantages
of student loan consolidation are already discussed.

Are you taking a student loan consolidation based on your needs or non-needs?
When you take out a loan based on need, these are the factors:

1) Your income and assets.

2) Your parents income and assets.

3) Number of people currently living under the same roof.

4) Number of family members attending college or needing financial assistance.

These are computed to calculate the Free Application for Federal Student Aid (FAFSA). If you qualify for the need based aid, you will be given the choices. Federal need-based aid is inclusive of the Federal Work-Study Program, Pell grants, Perkins loans and subsidized Stafford loans.

To be continued soon.