Learning about Federal Student Loan Consolidation
By : Phineas Gray Category : Finance
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Federal student loan consolidation is a confusing issue for someone who has little or no experience dealing with banks, debt, and budgeting. Frankly, that is almost everyone who is in college. It is hard to decide what to do with tens of thousands of dollars in debt when you have no experience with such things.

What It Is

Most students who have spent even one semester in school have several different loans with different interest rates, some subsidized, some unsubsidized, and sometimes through several different banks. Federal student loan consolidation is a process in which the federal government takes all the disparaging, separate student loans a person has accumulated over their academic career and creates one large loan that will be paid back to the federal government directly with a uniform interest rate.

What It Does

By consolidating your student loans, you will be able to have the peace of mind in knowing you are not forgetting to pay this or that bank. Also, the accumulated interest on several loans can oftentimes come out as much higher than the same or similar interest rate on a consolidated loan. In other words, federal student loan consolidation saves you both time and money.

Why It Is Needed

Putting your loan in the hands of the federal government takes it out of the hands of the banks, many of which are competing with each other and could not care less about what happens to the little people. Also, going through the federal government ensures your rates will never increase because the government has no economic incentive to do so and has written into law that they will not. There are also many government incentives and programs available to recent graduates who are still trying to pay their loans that will be available should you consolidate.

How to Get It

Debt consolidation isn’t something new. There are a lot of companies out there that will consolidate your student loans for you at a price. Whether that price is fair or not is up to you to decide. The federal government is who is really behind this federal student loan consolidation. That is who you should trust with these kinds of issues. The federal government will, however, often use a third party bank as a kind of emissary. But do not misunderstand; no bank will try to trick you into thinking they are federal representatives when they are not.








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