How Consolidation Centers Assist with Student Loans

Student loan payments can get as large as car loan payments and even house mortgage payments. They are no joke and shouldn't be taken lightly. Often a student may obtain several kinds of student loans throughout an educational career, especially students who go on to graduate school and doctoral programs. Consolidation centers allow a graduated student to effectively move all public i.e. non-private loans into one type of loan. While the same can be done for private loans, the conditions are not the same.

Several consolidation centers exist including Nelnet, the College Loan Corporation and Sallie Mae. All are enabled with the ability of managing debt from Government loans such as Stafford loans. Due to their ties with Government lending these loans are protected by the same laws that govern Federally administered student loans and are therefore not easily discharged. However, these companies may offer incentives to consolidate such as the following:

-Lower interest rates
-Fixed interest rates
-Cash reimbursement for consistent loan payments
-Interest rate deduction for extended loan payments
-Reduced interest rate for automatic payment withdrawal

These incentives, if offered can save a borrower a great deal of money and financial heartache if taken advantage of. For example, a student loan of $10,000.00 at 7% interest a year equals $58.00/month in interest alone. Add to that payment to the original loan and you may be looking at close to $100.00/month. With an interest rate reduction of 2% the interest payment goes down to $41.67 assuming a non-compounded fixed annualized rate. That is to say, if the interest is calculated monthly the rate will readjust to reflect the lower amount in the loan. So for example, if the $10,000.00 loan is now $9.950.00 the next months nominal interest rate if calculated monthly on an annualized basis would be $41.46. In other words, the terms of the loan and the interest rates are important to saving you money and making the payments easier.