subject: Ways to Clear Student Loans Easily [print this page] Ways to Clear Student Loans Easily Ways to Clear Student Loans Easily
Education is one of the tools that can guarantee anyone a bright future. As they say, knowledge is one of the most valuable assets anyone can ever acquire. Unfortunately education has become so expensive and unaffordable that most college students have resulted to depending on loans from banks. In fact a loan from one bank is usually not enough to offset all the bills a student incurs in his or her student life so, one student can have even four loans from different banks.
Repayment of these loans is usually the hardest part, the fact being that different banks expect you to make payments. If you have taken loans from different banks, it means that your payments come with four different interest rates. This can be so expensive and demanding to most students who are already struggling to pay the loans leave alone interests.
Fortunately, there are some techniques you can use to lighten the load, both in reducing the amount of interest that you pay and also in the repayment of the loans. Actually most lenders will offer you an array of payment options so it's advisable to pick one that suits your situation most.
Some of the student loan repayment plans you can consider are, extended payment plan. This allows you to stretch out the payments for longer periods. The amounts required monthly are less as compared to other plans. This means you can easily manage to make payments without much struggle. However you will have paid more money in the long run.
There is also the income based repayment plan. In this one, the payments you make are determined by the amount of income you get monthly. The advantage is that when you have low income months, you are allowed to make lower payments.
Another viable option is the graduated repayment plan. In this plan, the payments are low while the student is in school, but they increase gradually every two years. This means that by the time they increase you may be already working with a stable income, hence you will be comfortable making the payments.
However there is also another way you can drastically reduce the payments you make to different banks. As mentioned earlier, paying interest for a couple of different loans can be quite a daunting task. Fortunately there are options where you can pay one interest package for all the loans you may have. This is known as loan consolidation.
Loan consolidation has many benefits. First your overall interest rate is reduced drastically as compared to the amount you would have paid in separate loans. You can also get extended payment periods. This means that the monthly payments you make are also going to be low. Consolidation also offers you better loan repayment plans like the ones mentioned above. There are also incentives offered for payment on time, like getting lower rates.
Consolidating your loans makes payments easier; hence you can be in the good books with banks which definitely increases your credit ratings. High credit ratings are always a plus for you as far as dealings with financial institutions are concerned. However, be sure to choose a good consolidation program that suits your financial needs.
Enhance credit rating
If one has not yet consolidated his student loans, the tendency is to have several credits in different loan firms, possibly jeopardizing his credit score. Student loan consolidation helps improve the student's credit rating because the other credit lines are closed. Having a good credit standing can help his future plans of obtaining other private loans such as car loans or mortgages.
