Various Aspects of Consolidating a State College Loan

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So you have taken a state college loan to finance your college education. Now, you are planning to consolidate the same so that you can reap the benefits of consolidation. Before going in for consolidation of your state college loan, it is imperative that you understand the various aspects of consolidation.

You can exercise a choice in the type of loan for consolidation. It may be a federal loan or a state loan that can be consolidated. Each has it's own advantages and disadvantages. In the situation of you possessing both federal and private loans, do not consolidate them together. This is because various benefits of federal loans may be lost if you consolidate it along with private loans.

Federal Loan Consolidation Program

The Federal Loan Consolidation Program can handle state college consolidation loans. The main advantages of Federal Loan Consolidation Program are as follows:

- Federal Loan Consolidation Programs charge no fees, which is very advantageous for the students.

- This program does not ask for either any co-signer or co-borrower or for any credit checking.

- There are various types of repayment options available.

- There is the added benefit of forbearance and deferment.

- The government backs these loans.

- The government will make sure the loans are repaid in some way.

- In case of default of repayment, either your salary is garnished or your income-tax is seized.

Private State College Consolidation Loans

There is a huge competition in trying to secure a private state college consolidation loan. Still, it is not so very difficult to secure a private state college consolidation loan. A credit check is very vital to secure a loan of this type. Some of them may even ask for a co-signer or co-borrower to sign in the loan agreement guaranteeing that the loan will be definitely repaid. There are also cases when relief is given to a co-borrower on a time loan payment, after a specific period.

Before the co-signer signs on the agreement, the credit worthiness of the co-signer will be checked. It is very advantageous when you have a co-signer as you can demand lower interest rates as you are considered credit worthy and reliable.

A co-borrower has to satisfy the following conditions before he can proclaim himself as a co-borrower:

- Only US citizens with a Social Security Number and US mailing address can be co-borrowers.

- They have to be permanent residents too.

- They have to be of legal age of above 18 years.

- They must be reliable and have an excellent credit history.

- They must not have been bankrupt for the last seven years.

- In their history, there should be no case of student loan default.

- They must be freely willing and capable of signing the legal documents.

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