Students obtain loans not just for school fees and tuition fees but also to meet the expenses that they have to shell out towards boarding, food, books and so on. So, they keep acquiring these loans from various lenders at various points of time and at various interest rates. Once they complete their education, all these loans fall due for repayment.



Now, these students are caught in a fix as they find it very difficult financially and otherwise to meet these varied installments that fall due with various lenders. This is when they realize that it is best to consolidate their school loans. The process of consolidation can be best explained below.

Suppose a student called David has four loans with lenders X, Y, A and B. Then each month he has to repay X, Y, A and B individually some amount of money based on heir individual interest rates. Suppose if David goes in for consolidating his loans with X, Y, A and B with a lender 'Z', Then he no longer has to make individual repayments. Z will consolidate all these loans into one and fix a repayment plan and interest rate. The plan will be based on David's income and his choice. Now, David has to make only a single payment every month to Z, who will also extend the repayment term to a very long duration. Therefore, the monthly installment will reduce by 50% or more as compared to his previous monthly outlay.

After seeing this example, it would simple to list all the benefits of consolidating education loans. The main benefits are:

• Ease of repayment:

No longer do you have to run around and keep track of the various lenders. Now, you have to make only one payment to one person.

• Boost in credit rating:

Many students unable to meet the various payments due make defaults and ruin their credit rating, Instead of this, they may as well consolidate their loans. This will reduce their monthly installments and keep their creditworthiness intact.

• Reduce payments:

The consolidation provider increases the term of the consolidated loan. Sometimes, the term may even be extended to 20 to 30 years. This will, therefore, reduce the amount of monthly installment, may be by even half or more.

• Online facilities:

Most of the lenders now offer the facility of online payment of the loan installments. This is even more simple and easy. Thus, each month, you just have to go online, make a few clicks and you are done. Education loans are no longer a huge botheration.

• Better interest rates:

The consolidation providers will give the best interest rates but since the loan is an extended one, you may end up paying more interest than what you were paying before consolidation. If you have not defaulted on your loan, then do ask for better interest rates.

The maxim, 'Ask and you shall receive' does work wonders while consolidating your education loans. Therefore, do request your lender for special repayment plans, discount in charges and anything else that you may require.