Student debt consolidation loans are often the smart move a borrower can make if overlapped with college debt. A student consolidation loan is designed to help students who have vowed to simplify their loan repayment by combining several types of federal aid with various repayment schedules into one balance. The entire amount is then given a fixed rate with one monthly repayment.
Students loan consolidation can lower the total interest to be payed and possibly saving up to 60% on the monthly repayment. Some rates are as low as 4.75% giving you savings up to 1.25% and can be locked in for the life of the repayment. In addition to monthly savings this options may be able to rescue the borrower if in default on viral financial aid.
Before the worldwide economic crash, it was quite commonplace to see students consolidating their student loan debt. Then when the financial institutions suffered crazy losses and reduced their lending levels, the options available to students dried up.
However, there is still the real fear that once the economy begins to recover that interest rates will shoot back up. This could mean repayments on a consolidated student loan increasing beyond affordability.
Whatever the case, consolidating student loans where possible is a sensible option for many reasons. You can fix the rate of interest charged on the loan, which can assist you in planning your monthly budgets and plan for the future. It can also help to reduce your monthly repayments, which in most cases is an undoubtedly good thing.