Education Consolidation Loans

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Students take Education loans from banks to fund their higher studies. These are granted for a maximum period of ten years. They complete their studies, and when they start to earn money, only then do they begin to repay their loans. Sometimes when the cost of education is quite high, a student resorts to multiple borrowings from banks. It then becomes cumbersome for the student to manage them. Under certain conditions, he or she can avail of the Education Consolidation Loan, which is a loan program under the federal government loans that help him or her to merge all the education government loans into one. Such a merger simplifies the repayment.

While the old loans are paid off with a new single loan from the government, thereby giving immediate relief, the new loan called education consolidation loans, is with a much lower rate of interest and with an extended repayment term of 30 years. The student is immediately freed from the worry of repayment as soon as he or she lands himself a job. The interest rate is also quite low and does not vary during the span of the loan repayment. The equated monthly installment amount also gets lowered significantly. In order to retain federal loan benefits, students should avoid loan consolidation from private companies.

Education Consolidation Loans have other benefits. There is no check on the student’s credit worthiness. The repayment does not carry any charge. Though spread for 30 years, the student may perhaps want to pay off earlier than the loan period of 30 years and in such cases, there are no pre-payment charges unlike other government loans.

The eligibility criteria for Education Consolidation Loans are listed below and as can be seen, they are quite fair in their approach:

● The student must be in his or her six-month grace period after graduation or after commencement of education loan repayment.
● He or she has a minimum outstanding education government loans of $7,500
● He or she has multiple borrowings.
● He or she must be a first-time applicant for consolidation.
● If he or she has already availed of consolidation, then after consolidation he or she must have returned back to school and taken additional education loans.

Ideally, the best time to avail of Education Consolidation Loan is during the grace period for repayment that starts just after you have completed the course for which you took the education loan in the first place. This is primarily because the new lender automatically is entitled to get this grace period and in the process, you are given the additional benefit of lower interest rates.