Although many students must eventually resign themselves to student loan consolidation, many do not know what they are getting themselves into when they sign up for the loans in the first place. Financing a college career seems of the utmost importance when one is undertaking an education, but private student loan consolidation may be more than most students are willing to sacrifice when it comes to having to pay these bills every month.

There are many myths surrounding college loans, and because the process of receiving one is so simple, many students do not even know what they are getting themselves into. Many students are misinformed about student loans thanks to the boom in internet media and a love of misleading headlines. Many headlines are meant to turn heads rather than to inform, and when students actually sit down to read an article they may emerge from the experience more confused than ever before.

There have been some recent lending reforms, which were included in the Healthcare Reform Bill. These reforms were meant to offset the cost of healthcare, and though the two functions do not seem to be related, they are. The reforms allow interest from the loans to flow from the lenders to government programs. Student financing is a big deal because they are a big business – think about it, in this country everyone who wants a career is expected to go to college. In order to attend an expensive college, many students have little choice but to take out financing to pay for it. The government makes quite a bit of money from the system, and because it is such a big business it is a money maker even in harsh economic times. Because of the reforms, there are many myths circulating and a lot of confused students out there. Many believe student financing will now be more expensive when it comes time to repay them, but this is not the case. Now students will actually get to pay a lower percentage – 10%, down from 15% – of their discretionary income when they make a monthly payment. Instead of making it more expensive for students, students are now allowed to pay back the loans at more affordable rates.

The misinformation that financial aid will be reduced overall was also circulated after the reforms passed, but this is another myth. Financial aid may have been reduced by an ailing economy at least in terms of grants and loans issued by private lenders but the money coming from the government are still readily available for those students who need them. Another myth that confused many new college students was that a student might not qualify for financial aid if their parents’ income was too high. Student loans take into account much more information than what a student’s parents make each year, so that students who have siblings in college are still able to take out their fair share of federal money.

Students who are not sure about student financing would be wise to take a trip to the financial aid office on their campus and learn the facts before taking on the obligations that come with a loan.

Author Bio: Ellie Lewis recently spent time researching student loan consolidation. Her son is going to apply for a private student loan consolidation.

Category: Finances
Keywords: student loan consolidation,private student loan consolidation