Advantages to consolidating student loans
Federal Family Education Loans and Federal Direct Loans do not allow for any customization.
Federal loans are by far the most flexible of education loans, and give students the chance to borrow much needed college funds at very attractive terms.Student borrowers can help reduce the interest rate on their loans by employing a cosigner with a good credit history.Good repayment practices can also lead to the reduction of interest rates over the life of a student's loan.Keep in mind that interest continues to accrue on all private student loans during any deferment period.Borrowing directly from a lender that specializes in student loans offers distinct benefits as well.Private lender student loans can not be as flexible as their Federal counterparts, but they still offer greater benefits than a standard non-education loan. It allows the student to secure a loan at lower interest rates and better repayment terms, and gives him or her the opportunity to build a solid credit history of their own.
Private loans are decided according to an applicants credit history, and for most students this will mean the services of a cosigner, or co-borrower. Private lender student loans will usually offer lower interest rates than traditional loans, and will include loan deferments to allow students to postpone repayment until after graduation.
While private lender loans offer a number of borrower incentives and benefits, none can compete with a subsidized Federal Stafford loan.
Most banks and private lending organizations will offer borrower incentives as a way to attract business.
Luckily, student loans often offer special terms and provisions that make them a more affordable and manageable commitment for young college-bound students.
Most student loans offer lower interest rates, deferred payment options and a repayment grace period following graduation.
But even with scholarships and Federal grants, most students will face a gap in their college fund that requires a student loan of one form or another.