Student loans in the United States are of two types. The first is the federal student loans, which is given by the government, which the United States is the Department of Education Federal Student Aid. Another is private student loans, which is given by the non-governmental lending institutions. Interest rates are higher on private loans as federal loans. In addition, it is much easier to consolidate federal loans as non-governmental private loans. Most debt consolidators can not even commit to obtain private student loans consolidated.
Students with loans find themselves in bigger problems than students without loans. With a loan, the student must make monthly payments, in addition to various other bills. That is why many students are looking at debt consolidation as a viable method to solve their debt problems. Debt consolidation has become popular among students in various other names, such as bill consolidation, debt negotiation and debt settlement. In fact, debt consolidation is a simple process of combining all student loans into one loan with an interest rate.
When a student approaches a debt consolidation would require a bit of money the student and put in an escrow account. When a sufficient amount of money accumulated in this account, the consolidation would begin talks with creditors and ask them to lower their interest rates. Once this is done (and if it is done), the consolidation will pay their debts by the receiver. The student must then pay back only to the consolidation of the agent.
The schools themselves sometimes arise and suggest names of reputable debt consolidation organizations for their students. Alternatively, the government also helps to consolidate, provided the loans are federal loans. This is done by referring the student to a debt consolidator.
In cases where a student has a mix of federal and private loans, it is not advisable to group them together. The reason is that both types of loans may have different interest rates.
Obviously, the loan can be consolidated only when the student left the school. One condition is that the student should not be in default on payments and there is a minimum amount of loan that can be consolidated. In most states in the minimum limit is $ 10,000. Consolidation of private loans have more flexible rules, but the costs are higher. For those who do not want to consolidate their private loans, but want to ease the repayment, Citibank has a nice program, which can be accessed at StudentLoan.com.
Surveys have shown that the amounts paid on student loans tend to be higher than income students in the early years. Private institutions to offer loans to students to think they are an income higher than the level of education would be higher. But this is not always the case. Thus, students opting for debt consolidation as a way out of this vicious circle of debt.