Many students find it difficult to manage the student loan repayments debt especially in the initial stages of their career. Such students look for various options in order to tackle student debt effectively and come out clean. And student loan consolidation plans offer them several good options to tackle student loan repayment problems.
We have already discussed two types of student loan consolidation plans in the part -1 of this article.
In brief, what we discussed in part 1 was the plan that keeps the monthly repayment amount constant from the first student loan repayment installment itself; and we also discussed the plan in which the initial monthly repayment amounts of student loans are kept low by recovering only the interest portion (and the principal recovery starts a bit later).
There is another type of student loan consolidation plan that is available.
This type of plans uses your monthly pay as one of the factors for determining the monthly repayment amount for your consolidated student loan. Of course, the other important factor used to compute the monthly repayment amount is the student loan debt itself. However, this is not done on monthly basis. Instead, this calculation is done on an annual basis and the borrower needs to submit the required documentation every year in order for the lender to compute a monthly college loan repayment amount that is affordable. Also, there are certain rules that the lenders follow in order to maintain a range for the monthly repayment amounts.
So, this kind of student education loan repayment amount is very useful for students who want their monthly repayment amounts to be in tune with their salary. However, the annual documentation submission and calculation exercise can be a bit of a pain for you.
Yet another student loan consolidation plan involves a great deal of extension in the loan repayment period thereby lowering the monthly repayment amount for your consolidated student loan. However, such plans generally have a lot of terms and conditions attached with them especially with respect to the eligibility of the borrower and the maximum loan repayment term that is allowed.
Again, this kind of plan generally offers several options which are actually combinations of other student loan consolidation plans with this plan e.g. you can choose to keep your monthly repayment amount constant over the whole repayment term or you might choose to pay only the interest portion for the first few years (in order to further lower your initial monthly repayment amount of your student loan).
But note that this kind of plan too is increases the interest cost of your student educational loan.
