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Student Loan Consolidation and the Role of Government

May 7th, 2009

student-loan-consolidation.jpgWhen you enter your student life you only want to think of pleasant things like going out with friends, partying, classroom escapades, and other fun and possibly mischievous behaviors. A term like “debt” is not only irritating but also unpleasant to hear. The fact of the matter is that for most people, debt and student life go hand in hand. Today most students who join colleges borrow from various institutions to fund their education. This amount borrowed by them is supposed to be repaid once they start earning a substantial income.

Sometimes students borrow from many institutions to fund their education. They may also use credit cards to fund their daily expenses. The end result of all this is that they end up having to pay many different entities at the same time. Already under pressure from college to perform academically, students may find it very difficult to manage their finances. They end up missing installments, paying penalty charges, late payments, interest and so on. This only increases the debt burden on them.

Student debt consolidation programs help the student in merging the entire loan outstanding under one lender. You will only have to pay one single monthly installment to the new lender. In turn, this lender will pay the institutions that you have borrowed from on your behalf. The loan consolidator may also negotiate with your existing lenders for a reduced rate of interest. He or she may also help in reducing any penalty charges that other creditors have charged for not repaying the amount on time. This will reduce the burden on the students considerably, making it possible for them to concentrate on their studies better due to the added peace of mind.

Student loan consolidation generally falls under two categories: unsecured and secured consolidation loans. In a secured debt consolidation, you will have to provide an asset as collateral, whereas in an unsecured loan consolidation no asset is required to be given. The students usually opt for an unsecured loan because in this stage of their lives they usually do not have any assets of significant value that they could pledge as security.

Today government is playing a very important role in helping students clear their debts. The student debt consolidation program by the government is highly beneficial because it is relatively easy to obtain. There are no credit checks; you just need to show them a proof of graduation. The rate of interest charged in the case of a government loan is much cheaper when compared to other institutions.

The repayment period is usually ten years in a government student debt consolidation program; if necessary, this can be stretched out further up to thirty years. When the period is stretched to thirty years the amount that you need to pay every month is reduced considerably. These loans usually come with a deferment option which gives the student a grace period of 6 months to decide on various options the debt consolidation program provides.

Student debt consolidation programs are usually very beneficial for the students. It is very important that they are well aware of the terms and conditions offered by various debt consolidation agencies before finally deciding on which debt consolidator is best for them.


This article on student loan consolidation was originally purchased from a member of the DigitalPoint forums under a private label rights license. It has been modified somewhat to improve spelling, grammar, and general readability. Attempts to identify the name of the original author have been unsuccessful.


One Response to “Student Loan Consolidation and the Role of Government”

  1. comment number 1 by: Board Exam Results

    When I was in college, it really helps me finance my studies thru government loans.

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