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Bruce Mesnekoff

Consolidating student loan often confused with refinancing<br>

brucemesnekoff
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Bruce Mesnekoff

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  1. Downloaded from: justpaste.it/ue05 Consolidatingstudentloanoftenconfusedwith refinancing Aftergraduating,thestruggletorepayloansstressstudents.Manystudentspayhundredsof dollarseachmonthforrepaymentofloan.Infactmanyenduppayingmoremoneytorepay collegedebtsthantheypayfordailyexpenses. Ifyouareliabletopaymorethanonestudentloan,considerconsolidatingyourstudentloans. Consolidationisoneofthebestwaystoeasefinancialpressure.Consolidatingstudent’sloanis theprocesswheremultipleloansareclubbedintosingleloan.Youthenareliabletopaytheone largerloan. Howeverconsolidationisoftenconfusedwithrefinancing,thetermsaredefinitelygoingtoleave youconfused. Youmayhavebeenwondering,“ShouldIconsolidatemystudentloans?”beforethatknowthe mythsofstudentloanconsolidation. Myth1:It’sconsideredthatloanrefinancingand consolidationisoneandthesame. (Truth:Bothtermsaresimilar,buttherearedifferencesthatareimportanttoknow.) “Consolidation”and“refinancing”areoftenconfusedassame,buttheyaretwodifferent repaymentoptions. Consolidationgenerallyclubsyourmultiplefederalloansintoone.Itisdonethroughfederal government.Consolidatingloanmakesyourmonthlypaymentsimplerandyoucanalsogetaccess tomorefavorablerepaymentplansorforgivenessprograms. Refinancingstudentloanmeansyoutakeatotallynewloan,onewithlowerinterestratetorepay thedebtsofexistingloans. Refinancingandconsolidationgoeshandinhandforprivateloansandthattheveryreasonfor

  2. people’sconfusion.Forfederalloansthat’snotthecase.Ifyoudecidetorefinanceyourfederal loansthroughprivatelenders,bepreparedtoloseallfederalloanbenefits. Myth2:privateloanandfederalloanhassame consolidationprocess. (Truth:Boththeloansconsolidationprocessisdifferentfromeachother) Governmentprocessesfederalstudentloanconsolidationwhereasprivateloansare consolidatedthroughprivatelenders. Youmighthavetakenbothprivateloanandfederalloanandyoumayalsoconsiderof consolidatingfederalandprivateloanstogether,buttoconsolidatethemintooneloanisarare adviceanyonewillgive. Youcanconsolidateyourfederalstudentloansbyapplyingforfederaldirectconsolidationloanon thewebsiteFederalStudentAid.Consolidationdonotloweryourinterestrate,nodoubtinterest ratesarefixed.Theyarecalculatedbytakingaweightedaverageoftheinterestratesoftheall theloansyou’reconsolidating. Privateloanconsolidationisverydifferentfromfederalloanconsolidation.Forconsolidating privateloanyouneedtoapplyforanewloanthatwillhelpyoupayyourexistingloans.Your potentiallenderswillevaluateyouonthebasisofyourcredithistoryand,ifyouqualify,theywill makeanoffer. Myth3:Peoplebelievethatconsolidatingstudentloans involvesverylittlementaleffort. (Truth:Studentloanconsolidationisn’tappropriateforeveryperson.) Ifyouowemultiplefederalstudentloans,oneofthebestoptionsisfederalloanconsolidation.You canorganizeyourmultipleinterestrates,termsandloanservicersintoonemonthlypayment.But consolidationisn’tforeveryone, Therearebenefitsoffederalstudentloanconsolidation;youcanhaveaccesstorepayment option.Federalloanconsolidationcanbebeneficialifyouneedtodoittoaccessarepayment optionandforgivenessprograms.Toavailthesebenefitstheborrowersshouldhavefederaldirect loan.

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