What is it?
When you consolidate student loans, you bundle all federal student loans that you receive to finance your college education into one. When a new loan is issued, the lender pays off the outstanding balances of the loans you consolidate. In short, it is a practical repayment management option for students.
Why Consolidate Student Loans?
People consolidate student loans to lower their monthly debt. When you consolidate, your original loan amount is paid off in full in return for a new loan for the combined balances. This new loan will have lower interest rate that is fixed for the life of the loan.
When you consolidate student loans, you could reduce your monthly payments by upto 54 percent. Other advantages include reducing your interest rate by 1 percent after you maintain your on-time payment record for a certain period. Also, there are no pre-payment penalties on consolidated loans.
Once you consolidate your student loans, it is gone and there is no going back. You can also consolidate only once. So, be sure that you make the best Financial move that you can make before plunging ahead.Also remember that you need to research a bit to find the best service that can be the most beneficial one for you.