While looking into your federal student loan, you may have come across the term "loan consolidation."  That can be a very valuable tool for addressing your loan debt, but what is it?  What can it do?

Well the simplest answer I can give you is to substitute the word "refinance" for "consolidation, because that is basically what it is.  When you consolidate a loan, you are taking out a new loan to pay off the old one.  But wait, people refinance to get a better interest rate, and it doesn't look like the rate is going to change much.  Why would I want to consolidate?  There are three reasons.

  • To Combine Serveral Student Loans Into One
  • To Benefit from a Repayment Plan Program
  • To Get Out of Loan Default

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.