Paying Off Student Loans
Colleges are expensive and it leads to many students looking for student loans to be able to help them financially during the four or five year period. There are some loans that are designed for shorter courses but some student loans will cover longer studying for those who want to become doctors or lawyers.
There are many different types of student loans that you can take out and you can take out more than one. However, the problem is when it comes to paying off the student loans. While loan consolidation may sound better than having to pay off the separate monthly repayments, if you have federal student loans, you will not be able to join them in with any private student loans that you have.
Consolidating your private student loans is usually the best option as you will be able to freeze the interest rates by only paying a set amount that has already been decided on. However, consolidation does not work as well with federal student loans as the interest rates are now being fixed.
The United States is also making a move similar to the United Kingdom for the repayment of student loans. Rather than paying a set amount each month, a person will only need to repay an amount that is a percentage of their monthly wage. This will be a maximum of nine percent of the monthly wage so it will always be affordable. This can put a lot of students’ minds at ease as they realize they can afford it if they are on a low income.
However, you will need to apply to be placed on this student loans payment plan. While there are benefits to this, if you have already been making your monthly payments, there are also some disadvantages to it.
If you have not cleared your student loans balances within 25 years, the debt is forgotten about. This has no affect on your credit rating and you will not be taking to court for not paying the money; you are completely forgiven for it. This is something that many students look forward to it, however this 25 years is restarted by asking to switch to the new form of paying off the federal student loans.
The debt consolidation also has the negative effect when it comes to the 25 years. By taking out a consolidation loan the type of loan will no longer be classed as student loans; you will have taken out a personal loan. The 25 year plan no longer stands as you will have used the loan to pay off your private student loans in full.
When it comes to paying off your student loans, you should look into all of your options but bear in mind all of the pros and cons. If you do not believe that you will ever be able to pay off the debt, then you should consider to keep paying the separate loans. However, if you know that your wage will pay them off eventually, consolidate them so you can freeze the interest rates. To get the most out of your debt consolidation, consider Purefy. They help you compare rates from top lenders with no impact on your credit score.