Federal Consolidation Loans – A Help Or A Hindrance?

What are federal consolidation loans? A proud college senior only lacks a few months until graduation day when her studies will be over. She will walk away with her diploma in her hand, ready to step into her new career. Suddenly, the realization hits her. She had never really thought about it before. There are a number of student loans that she has to start paying off right after graduation, and her beginning salary isn’t enough for living expenses plus all of those loan payments. What will she do?

Graduating seniors have the possibility of consolidating their multiple federal loans into one loan called a federal consolidation loan. This is a way to refinance college loans and combine them into one loan with a fixed-rate.

A consolidation loan is an excellent way to manage your finances, it provides immediate relief from high payments and it provides long range benefits. One of the immediate benefits is that there are no application fees, hidden charges or credit checks.

The biggest advantage of consolidating your federal loans is that your monthly loan payment will be lower. On the web site studentloanconsolidator.com it shows that if a student owes $ 40,000 in federal loans, the individual monthly loan payments will equal $ 456.64. However, if he consolidates them into a single loan, the monthly payment would be just $ 275.10. That equals a monthly savings of $ 181.53!

You don’t have to worry about not receiving a federal consolidation loan. There is no credit check, and it’s very simple to apply. The only things you will need are your loan information and your 4 digit FAFSA pin number. When you fill out the application, they will give you several repayment plans you can choose from. Be sure to investigate the individual plans before you go so you’ll know which one you want to use.

You will have the opportunity to choose how long you want your loan repayment to last. The minimum is 10 years and the longest is 30 years. Choosing a longer time period will give you lower monthly payments. The extra money each month can help towards other expenses that you have. If you get a pay raise or a higher paying job in the future, you can pay your consolidation loan off faster without being penalized.

Federal consolidation loans can be a tremendous help to college seniors who are ready to graduate. It will give them the opportunity to become established in their new job without being under undue financial pressure. You won’t regret the decision to consolidate your federal loans once you begin to experience the financial freedom it will bring.