In today’s economy, it is essential to be prepared when researching federal and private school loans. Consolidating student loans is the process some complete after graduation, to combine loan payments into one. Here are the basic college student loan types:Federal Loans
Federal Direct loans are supported by the government and offer lower interest rates and some flexibility when it comes to loan repayment. Since federal student loans don’t require payment until after a degree is earned, they allow the focus to remain on school. Most students are able to qualify for a federal student loan but must go through the process of filing a Free Application for Federal Student Aid (FAFSA) first.
A private student loan is also an option for funding a college education but doesn’t provide the flexibility that comes with a federal loan. A banking institute or credit union serves as the lender in this case and will base your loan qualification and amount upon a credit check. Variable interest rates are attached to your private loan and are dependent upon current interest rates.
School Consolidation Loans
Loan consolidation can help the borrower reduce monthly debt payment by combining more than one student loan into a consolidation loan. Although this can prolong the repayment process, it reduces the amount of money paid each month, which can help the borrower remain current with payments. Consolidation loans come in both Federal and Private consolidation forms.
Utilizing a school loan to fund college education can be a wise investment into the future. Like any other investment, it’s important to plan carefully to ensure the intended goal– obtaining a college education — can be met, without incurring debt that cannot be repaid in the future.