What Are The Requirements For Debt Loan Consolidation For Students?

After a person graduates from college or technical school

, he or she is given a grace period before that individual must pay on educational debts. This grace period is typically about six months after that person's graduation date. However, as people progress through school, many times the original lender sells the initial amount to other financial institutions. As a result, by the time they graduate, people may face making multiple payments to various lenders. To make the process of repayment less complicated, many individuals choose to take out student debt consolidation loans. With that, they will only have to make a single payment each month to one company.

Most graduates qualify for such an arrangement. In fact, a majority of schools make this option known to them before they graduate. Before a person completes school, he or she is required to undergo exit financial aid counseling if that individual borrowed money to complete his or her education.

This counseling educates students about repayment options and requirements as they establish their professional lives. The option of consolidation is emphasized because it may simplify the paying back process they will undergo during the course of the next few years.

However, because this process is legally binding, people must meet certain requirements before they are allowed to agree to this contract. The first requirement is that people must be at least eighteen years of age. Most states do not recognize individuals under this age as being legally capable of agreeing to a binding contract.

Along with the age factor, most consolidators want clients to be legal U. S. Residents. This citizenship mandate prevents clients from escaping their obligation by claiming citizenship of another country. If they were citizens of another country, the U. S. Laws would not apply to them and could not be enforced. The company would not be able to recoup its money.

Another mandate requires that graduate make a certain amount of monthly income. If customers have no income, they cannot make payments. However, their lack of income does not excuse them from their obligation. It only delays their satisfaction of this loan. Even so, if a person does not make enough money to pay on this amount, the monthly payment amount may be reduced or the person may qualify for financial hardship forbearance.

Once these requirements are met, people may then agree to the contract and allow the consolidator to acquire the outstanding debts from the various other lenders. Once the debts are established into a single amount, a payment amount can be established and the terms for how much and when payments must be made can be determined. In some cases, the client may see his or her initial interest rate lowered to accommodate his or her current financial situation.

By choosing student debt consolidation loans, college graduates may be able to meet their obligation better and find it simpler to make a single payment each month to one company, rather than to several lenders. Before a graduate can agree to this arrangement, he or she must meet certain requirements that make enforcement of the contract possible.

by: Brook Evans

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