After graduating, the struggle to repay loans stress students. Many students pay hundreds of dollars each month for repayment of loan. In fact many end up paying more money to repay college debts than they pay for daily expenses.
If you are liable to pay more than one student loan, consider consolidating your student loans. Consolidation is one of the best ways to ease financial pressure. Consolidating student’s loan is the process where multiple loans are clubbed into single loan. You then are liable to pay the one larger loan.
However consolidation is often confused with refinancing, the terms are definitely going to leave you confused.
You may have been wondering, “Should I consolidate my student loans?” before that know the myths of student loan consolidation.
Myth 1: It’s considered that loan refinancing and consolidation is one and the same.
(Truth: Both terms are similar, but there are differences that are important to know.)
“Consolidation” and “refinancing” are often confused as same, but they are two different repayment options.
Consolidation generally clubs your multiple https://pay-day-loans-massachusetts.info/ federal loans into one. It is done through federal government. Consolidating loan makes your monthly payment simpler and you can also get access to more favorable repayment plans or forgiveness programs.
Refinancing student loan means you take a totally new loan, one with lower interest rate to repay the debts of existing loans.
Refinancing and consolidation goes hand in hand for private loans and that the very reason for people’s confusion. For federal loans that’s not the case. If you decide to refinance your federal loans through private lenders, be prepared to lose all federal loan benefits.
Myth 2: private loan and federal loan has same consolidation process.
(Truth: Both the loans consolidation process is different from each other)