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Is Getting A Student Debt Consolidation Loan Effective for the Student?

As a student, there are lots of expenses that have to be borne by you. You have the student loans where you have to make monthly payments, your day to day living expenses to take care of and of course, any additional expenses like medicine, books and traveling that has to be taken care of. Sometimes, all these expenses prove to be higher than the income you generate.This leads to debt for you and additional tension where you may find it difficult to concentrate on your studies. So something has to be done about this, as you can’t waste your student life worried about monthly payments as this is the time you have to study. You may avail of some credit here and there, however, one day; this credit would have reached its limit. So before this happens, you have to change your spending habits.The best option you have is a student debt consolidation loan. This is something that most people and students have heard about. However, the question of how effective it is depends on the student, and the loan. With a debt consolidation loan, all the existing loans are merged into a single loan, called the debt consolidation loan. This debt consolidation loan calls for lowered monthly installments. This is possible because the representative from the company approaches your creditors and negotiates to lower your interest levels and balance amounts.So you finally end up with a single lower monthly installment. There is no need of facing multiple lenders as the debt consolidation company pays your creditors with the monthly installment you make them. The effectiveness of a student loan debt consolidation loan depends on the average interest you are charged for all your debts and loans.This means that if you have more of federal student loans, you can’t actually expect a debt consolidation loan with lowered interest rates. This is because these federal student loans are from the US department of Education, and are allotted to you with no profit in their terms. Whatever interest rate they charge is sufficient to cover their administrative costs only.So if you have some federal student loans, it is better to leave them aside when consolidating your loans, as you may end up paying more on the principal. This is when student loan consolidation is not feasible. Instead, it proves to be better to try some federal programs where you consolidate government loans, or maybe reprogram your repayment schedule so that it is lighter on your budget.You find that student debt consolidation loans more effective if you have more of private student loans. This is because these loans have a higher interest rate, and its consolidation leads to lowered interest rates. You can also merge your credit card balances with these private student loans to get a student debt consolidation loan that offers lowered monthly installments. In fact, you stand to reduce your average interest rate by 5 points, and save as much as a few thousand dollars in a year, depending on your debt amount.

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