by Adewale Olowode

Created on: October 21, 2008

Students loans are financial incentives to assist students with the funding of their college education. College education, nowadays, is seen by many people as the right ticket to pave way to a better and prolific future. It is the key to open doors, the pathway to a catalogue of alternatives. Student loans may be secured or unsecured, but both are repayable only after college. Federal loans are unsecured students loans designed for college education. It is unsecured because the federal government stands as the risk-bearer of the loan transaction, playing the role of the cosigner and providing the collaterals. The Federal Aids for Students Application (FAFSA) is still very important in the application process for federal loans. On the other hand, private student loans are secured loans offered by private banks and other financial institutions for the sole purpose of college education. They are secured loans because a cosigner with adequate collaterals is always required. Generally, students loans are used to pay for tuition, room and board, computer and lab fees, health insurance, and books.

Consolidating loans is all about better loan management. If a college graduate will be able to manage all of his/her students loans, then it may be well to consider consolidation. According to a school of thought, a good loan manager consolidates, while a bad loan manager do otherwise. Consolidating students loans mean that all of the loans from various lender are put together to become one. Usually, this process is achieved with another lender who is a specialist in the field of loan consolidation, after all the different lenders constituting the earlier transactions have been duly informed. An extension of loan consolidtion management is the student loan forgiveness program Why then is consolidating students loan worth considering. The following points serve to bear the witness:

Reduced interest rates

When student loans are consolidated, the overall interest rate is reduced considerably. This point may not be noticeable to the college graduate at first, but a thorough discussion with a loan advisor should reveal this secret after some calculations have done.

Fixed interest rate

Most lenders are habitually used with fluctuating interest rates on loans. Even though a borrower is notified as changes take place, no borrower is happy to see a new figure showing 14.5 percent when actually, he signed the contract two years ago at 12.0 percent. By consolidating several loans into one,

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