Most students that graduate from high school have dreams of attending college. Those dreams are becoming less of a reality with the rising costs of tuition and other educational expenses. Recently, tuition spikes have been rising faster than inflation; states are footing less of the education bill and students are left holding the bag. Nearly all students will have to take out at least one loan to cover their educational needs. Upon graduation, these students are stuck with several different loans from various lenders - each with differing terms, conditions, fees, repayment schedules, interest rates, etc. These borrowers end up drowning in a river of loan debt by the student before they realize it has started to rain. It's difficult to prevent loan debt, but borrowers can control their educational finances by employing the use of student loan consolidation corporations.
Two Types of Student Loans
Generally speaking, there are two types of student loans: federal and private loans. Federal student loans are issued by the US Treasury and are controlled by mandates issued by the US Congress. Until recently, this loans could be merged using any student loan consolidation corporation, but no longer. Federal loans may only be combined with other types of federal loans and may only do so using the federal consolidation programs.
Private student loans are a little more flexible in regards to the consolidation process. Regardless of the issuing company, private loans may be combined with nearly any other type of private student loan. Using a student loan consolidation corporation will allow all the individual loans from each to lender to be merged under on lender.
How do Student Loan Consolidation Corporations Work?
All consolidation programs differ according to lender, but there are some rudimentary guidelines that most companies follow. Basically what happens is a borrower contacts a consolidation company to express interest in receiving its services. Once the borrower consults with loan specialist, he decides which loans he wants to merge and begins the paperwork. If the consolidation corporation approves the borrower's application, the company will then purchase the loans for the student from the current lenders and close those accounts. A new account will then be issued by the purchasing consolidation corporation and the amounts of the previous loans are combined under one loan with a single set of terms and conditions.
What Services do Consolidation Corporations Provide?
Student loan consolidation corporations usually provide more services than to just private loan borrowers. Certain consolidation companies also provide services related to personal and business banking, investment opportunities, retirement plans, general credit issuance, and insurance needs. Having multiple accounts with one company often has incentives such as relationship and automatic payment discounts. Having a trusted business relationship with a reputable company is something of which many borrowers dream. Loyal customers with repeat business ventures often receive special rates and incentives to remain with their chosen financial corporation. If a borrower elects to have any special financial services, he is smart to consider holding all his accounts within one lender.
Student loan consolidation corporations offer a myriad of amenities to help borrowers control their private educational loans and manage their personal finances. Regardless of the type or number of loans an individual has, most borrowers will benefit from the services provided by these lenders.
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