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In recent years government cutbacks have reduce the
amount of funding for colleges and universities. Tuition
has increased, and as a result an increasing number
of students have had to get student loans to pay for
their education.
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If you manage to get a good job when you graduate
you may not have any trouble paying off your
loan. If you are not so lucky, you may not be
able to find a good job in your field, and without
a good income it's very hard to repay your student
loans.
When the cash crunch comes, you may need to
refinance
a student loan or consolidate your student
loan to put you back on the path to financial
success.
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Why should I consolidate my student loans?
Most student loans carry low interest rates when
you have the loan. In most cases no payments are required
while you are a student, and many student loans have
an interest "holiday" for a period of time
after you graduate.
At some point, however, you must start making payments
on your student loans, or face collection action.
The problem is worse if you have more than one student
loan, perhaps a federal and state or provincial loan,
and you are required to make payments on all of them
at different times of the month.
If you have more than one student loan, if you consolidate
your student loans you now have one monthly
payment instead of multiple payments, which makes
budgeting much easier. Having only one monthly payment
is the first reason to consolidate your student loans,
also called a school
loan consolidation.
The second reason to consolidate your student loans
would be to get a better interest rate. When the interest
holiday is over, your student loan may carry a very
high interest rate, because the lender wants to get
their money back.
If you are now working at a good job, your credit
may be good enough to allow you to qualify for a lower
interest rate on a student loan consolidation loan,
which reduces the interest you pay, making it easier
to repay your loan faster.
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