Student loans, like any other debt, can quickly become overwhelming. It's not terribly difficult to get into a situation where your loans are dominating your monthly bills, even to the point of making it hard to squeeze out payments for food and shelter. Juggling your loan payments adds to your stress levels, and if you've got multiple loans, it's entirely possible to forget one or two, get socked for hefty monthly payments and damage your credit rating permanently.

No one wants to go to school just to have their credit ruined after graduating. This is why it's important to consider debt consolidation in your repertoire of financial tools, even for your UK student loan. Consolidating your UK student loan allows you to make one monthly payment instead of several, and that one monthly payment is generally lower than the cumulative sum of your existing loans, often by hundreds of pounds.

There are two basic types of student loan consolidations in the United Kingdom. A secures loan has you put up some sort of collateral; if you fail to make your payments on time the lender takes control of your collateral. A secured loan usually has lower monthly payments and lower interest rates. You can also get unsecured loans that do not require any security, but with higher interest rates. There is no replacement for shopping around for the best deal.

Loan consolidation is a practice where you buy a loan for a lump sum of money and pay off your existing loans; your new lender gets your monthly payments, at a lower interest rate, but over a longer term. The rule of 72 shows how they make money on this. Take 72 and divide it by your interest rate in points, and you'll get an idea of how long it'll be before your interest accumulates to an amount equal to your principal.

If you decide you want to consolidate your UK student loans, check online sources first. Most online sources have rate comparison charts, and monthly charge calculators. Most also have instant quote generators; these are usually rough estimates only, but give a good idea of what's available. Some lenders specialize in certain demographics, so while a 22 year old may get a better rate with one lender, a 34 year old might get a better rate with another lender. It is all about your specific case, which is why you should shop around before deciding on a lender to consolidate your UK college loan.

By: MauiNick

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