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<br>Loan consolidation carries risks and rewards
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[Loan consolidation carries risks and rewards, robyn Post] t’s not uncommon to see a student writing a check along with the comment of, “I hope I get paid before this check clears my account.” Car payments, tuition, rent, books, credit card payments, and general living expenses can easily consume a student’s limited budget. After awhile all of these expenses can add up, especially if you’re borrowing money from different financial sources to pay these expenses.
Most people don’t realize students can consolidate all of these expenses to one monthly payment. The State of Idaho and certain financial institutions offer personal loans addressing the needs of students.
Direct Consolidation Loans, which are offered by the State, allow students to pay off particular types of tuition loans. Unfortunately, June 30 was the deadline to apply for these loans. These loans are usually a six-step process that is hassle-free and quick. In fact, they will pay off other loan holders within ten days of receiving approval.
In order to qualify for the loan, you must be a student of either full-time or part-time status. Payment on these loans carries a minimum of about $50 a month, or may be placed on a sliding scale to adjust to income level. The student has anywhere from 12 to 30 years to pay off the balance.
Other financial banking institutions, such as Wells Fargo Bank, feature student loans. When logging onto a bank’s website, there is usually an option for students. Wells Fargo in particular offers a loan that is similar to Idaho’s Direct Consolidation Loan. One consolidation loan allows students to pay off multiple expenses such as credit card and student loans and at the same time offers a line of credit for personal needs.
Once a student has completed their education, Wells Fargo allows the borrower up to 15 years to pay off the loan.
When deciding to consolidate financial advisors recommend students ask, “Do I really want to pay off everything now and be broke?” or, “Should I have more financial freedom now and pay off my debts later?”
One fact about loan consolidation is that after the loans are closed and paid off, the borrower has ended up paying more money than they would have if they had just penny-pinched and paid off their debts as soon as possible.
One good question to ask is, “What are my plans after college?” In asking yourself this question you may be able to decide the most economical choice.
Robyn Post (The Arbiter)