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You know
exactly what you are paying out and when. No more worries about
missing a payment or going overdrawn at the bank because you were
unsure of what amounts were going out and when.
What are the
benefits and pitfalls of a Student Debt Consolidation Loan?
Benefits
Well, as a
student, the biggest benefit of all has to be the low interest rates
offered. A Student Debt Consolidation Loan does not incur any
additional fees unlike private debt consolidation loans. This is due
to the fact that subsidies are paid by the government to the lender.
Also, Student loan consolidation can be beneficial to students' long
term credit rating. This is really important as it will impact on
your life way past your school days.
Pitfalls
The initial
euforia of consolidating your debts can wain over the years. This
type of loan is typically spread over a much longer period of time
than other loans due to the fact of lowering the monthly payment.
Because of the length of the loan, you will also be paying back more
interest over that period of time. The other important factor that
needs consideration is the temptation to add to the debt when your
payments are lower. Debt is often like being on a merry-go-round.
You have debt. You get a loan to pay it off. You incur more debt.
You get a bigger loan to pay that debt and the initial loan, and it
goes on and on and on...... At some point you need to get off the
ride and deal with the debt you already have.
Overall Considerations
Lower monthly
repayments will certainly help you free up some well needed cash.
One monthly payment will certainly help you manage and keep a
tighter rein on your finances. You will also have the benefits of
flexible repayments as a student. You will be entitled to a lower
interest rate than the private sector offering debt consolidation
loans. You can improve your overall credit score with student loan
debt consolidation. This will set you up for a great financial
future.
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