Federal loan consolidation is definitely a boon for millions of students who take various kinds of education loans. Federal loan consolidation is very convenient, simple, and much more advantageous than other types of loans or debt consolidation programs. This program also works about the principle of merging multiple debts into a solitary debt. But it has several other attractive features / aspects making it much more appealing to students. Let's find out why is federal loan consolidation so simple and beneficial a choice.
Federal Backing
Unlike other debt consolidation programs, the actual U. S. government supports federal loan consolidation. In other words that in case a student defaults in repayment of consolidated loan, the government steps in and takes care of the loan to the concerned company. Thereafter, the federal government recovers the due amount from the student. Right now, this feature makes the student loan consolidation businesses really enthusiastic in granting consolidation loans to students since the risk factor is eliminated for them. This also weeds out the typical requirements like credit check and employment / earnings verification. Most of the companies do not charge any type of fee for student debt consolidation.
Benefits Galore
Graduates who opt for federal loan consolidation or even student debt consolidation benefit from this ingenious idea in many ways. Firstly and obviously they get rid of multiple loans and monthly payments. This significantly reduces botheration and enables them to higher concentrate on other affairs. Further, student loan consolidation companies calculate a set interest rate on the consolidated loan, thus ridding you of any worries regarding interest rate fluctuations because of inflation. If you cope with a genuine loan consolidation company, they mostly fix a lower interest rate for you as compared to the rate of interest in your multiple loans. Thus, you can save thousands of dollars if you manage to obtain a really good deal. Basically it depends on the quantum of interest on your original loans and the type of company you deal with.
Also, if you desire to, you can go for a longer period associated with repayment. The standard repayment period is 10 many years. You can opt for a period as lengthy as 30 years. This automatically leads to reduction as high as 60% in your monthly installment amount. Thus, it becomes much easier for you to pay the installments and spares lots of money for you to spend on your other needs / bills.
In addition to the above, you may also avail the facility of deferment or forbearance in the event you face a financial crunch. Plus, there are absolutely no penalties for pre-payments i. e. you can even pay off your loan sooner than the scheduled period if you are capable of do so. Federal loan consolidation companies do not impose any penalties in such instances.