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What is the difference between consolidating and refinancing student loans?

I would like to start preparing for my student loans payment process. I would like to inquire about how refinancing student loans help reduce the financial burden. I would also like some additional information about the process of consolidating student loans. I have also heard from friends that grants are a good help in ridding loans since I am still in my final year in school is there a way I could also secure grants to pay off my student loans?

Jan Berry

in Student Loans

1 answer

1 answer

Donald Ward on January 18, 2018

I affirm that refinancing option helped me clear the loan easily and promptly. Refinancing your student loans will enable you to have a smooth payment process since you will receive a lower interest rate compared to your previous rate. Refinancing best suits people drained of paying their loans at a high interest rate. It is a voluntary way for students to subsidize their loan repayment interest and even get a chance to renegotiate the terms of their initial debts to suit their financial situation. A private lender completely repays your student loan and offers you a new payment plan with a lower interest rate and a flexible loan repayment plan. You also get a chance to choose a payment time frame that suits you. Refinancing is very effective but there are however some requirements necessary for you to qualify to refinance your loan.

  • Ensure that you have a good credit report. Ensure that your overall debts do not exceed half of your total income. It is important to have a monitored spending routine.
  • Ensure you have a good steady income. You should have a stable job with strong income flow that will enable you to pay your lender with ease
  • Ensure you additionally meet both the financial and education requirements of the lender. 

The consolidation of student loans is a financial strategy that is mostly confused with refinancing but consolidation is when you use one larger loan to pay off several small loans. The consolidation process could be chargeable by some debit relief organizations however in most cases it is free. If you have several student loans you could consolidate them into one which not only makes it manageable to pay but also makes you meet the requirements of other programs. Grants are also a good way to pay off your loans; you could apply for federal grants which are commonly awarded to students. Grants vary from one to another depending on the career you pursue and even your qualifications. Since the federal grants are very competitive you could also apply for specified grants like private grants, college grants and even disabled students grants. During my time in school I also secured several grants that helped me with the payment of my student loans; the best thing about grants they pay your loans without need for repayment in the future.

Wilson Hansen2 years ago

I do not support the process of consolidating your loans. It is a very risky process that will leave you without federal protection. There are also some companies that will charge you for the services which are done for free by the department of education. I highly recommend that you do not use companies that charge for this service to help you consolidate your student loans. By consolidating your federal loans you are combining them into one loan which makes you eligible to pay once you graduate or leave school for whatever reasons. You will also be required to start paying 60 days after the date of disbursement. Your loan term will also be extended to 10-30 years which is a very long time to remain in debt.

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