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What Is Student Loan Consolidation?
Combining two or more education loans into a new loan that has a longer repayment term and a single monthly payment that is smaller than the sum of previous monthly payments. ...
Student Loan Consolidation Faq We hope you find the following Student Loan Consolidation FAQ extremely useful. Feel free to drop us a line if there are things you would like to see added. After all, you are the reason we are here and we want to make sure we are doing what helps you most, whether that's through our Student Loan Consolidation FAQ or from all of the other tips and resources we provide. Why should I consolidate my government loans? Federal might be the best thing for you: What is a Federal Consolidation Loan? The interest rate on a consolidated loan will be a fixed rate for the entire term equal to the weighted average interest rates of your consolidated student loans rounded up to the nearest 1/8% not to exceed 8.25%. A Federal Consolidation Loan is a loan that repays some or all of your outstanding eligible federal student loans, and replaces the multiple payments you may be making each month with a single student loan payment. This is a big help because your repayment term would most likely be extended to make your monthly payments lower and costing you a lot less.
Why should I not consolidate my federal student loans? Federal might not be right for you: Student loan consolidation sounds too good to be true. Is this another debt consolidation scam? Absolutely not! The Federal government created the program to help students and their parents afford higher education, so that our youth is better educated and can achieve higher earning power. Like many government programs, however, some of the rules and procedures may be a bit complicated. That's why you're encouraged to let eStudentLoans.com be your provider of choice! How do I find the details for the student loans that I have? You can easily find details on any of your student or parent loans–including current balances – online at the U.S. Government’s website: http://www.nslds.ed.gov/SAStatic/PrivAct.asp National Student Loan Data System. You will need a PIN to login, and can get one online by visiting: http://www.pin.ed.gov/PINWebApp/pinindex.jsp What loans can I consolidate? What are my repayment options for consolidation loans? There are four primary repayment types you can have: Standard Fixed monthly payments for a maximum period of 10 years. Extended Depending on the existing loan balance(s), payments may be extended for as long as 30 years. See the table below. Loan Balance Eligible Term (Years) Less than $10,000 12 $10,000-$19,999 15 $20,000-$39,999 20 $40,000-$59,999 25 $60,000+ 30 Graduated Repayment Interest-only payments are made for a period of 2 years and then level, regular payments after that. Some companies offer an extended version which provides 2 years of interest-only payments, followed by a period (2-3 years) of slightly higher payments consisting of interest plus some principal, before shifting to regular, level payments. If borrowers anticipate the need for smaller payments at the outset of their repayment period, a graduated repayment plan can be selected. Keep in mind that delaying payments on principal will likely increase the total cost of the loan. What you should know about changes to Federal Consolidation - Fall 2007 The government has dramatically decreased the amount of revenue that is earned by lenders for Federal Consolidation Loans. Because of this, almost all of the Lenders for Consolidated Loans have drastically curtailed the the borrower benefits that you would have previously seen. Consolidating your federal student loans might still be the right move for you to take – you can lock in a lower fixed rate on your variable
By Michael Lawver
Student Loan Consolidation Programs - Student Loan Debt Consolidation, Private, Direct
Student Loan Consolidation Programs - Reduce your monthly student loan payment by up to 60%. Guaranteed low interest rates. Discover the benefits of student loan debt consolidation and apply online.
Private Student Loans, Consolidation, Private College Loans, Alternative Student Loans
Apply online for private student loans, their consolidation and alternative college loans. TheStudentLenders offer an affordable rate, easy application, no loan limit and quick decision!
Consolidate PLUS Loans: Federal PLUS Loan Consolidation
Consolidate PLUS loans; finance up to the total education cost of the student. With flexible payment options federal PLUS loan consolidation is an attractive financing alternative for many parents.
Graduate PLUS Loan Consolidation
Graduate PLUS loan consolidation at low interest rates. Federal grad PLUS loan consolidation is a cost-effective alternative with favorable repayment terms and borrower benefits.
Stafford Student Loan Consolidation - Consolidate Federal Stafford Loans with TheStudentLenders
Stafford student loan consolidation at low interest rates are available for undergraduate, graduate and professional students that help to finance education. Know more about federal Stafford student loan consolidation and apply online.
Student Loan Rates : Student Loan Consolidation Interest Rate
Information on student loan consolidation interest rate, student loan rate, PLUS and Stafford loan interest rates. Get benefited from lowest rates offered at secure terms by top lenders.
rate federal loans prior to the new “repayment” rate kicking in, as an example – the extent to which lenders have offered interest rate and principal reductions as an incentive to choose their product over a competitor’s will be significantly reduced. Deals can still be had and differences still exist – so be sure to shop around and compare offerings before you commit to a particular lender.
Can I consolidate other loans with my Federal student loans, such as credit card and private loans?
Only eligible federal student loans can be included in a federal consolidation, but you could get a private student loan consolidation. If you are having trouble repaying other loan or credit card debt, you could go through a non-profit credit counseling company and have it managed that way. This will help you reduce costs and also improve your credit rating over time. You can speak to these credit counselors at any time since they do not charge for discussing your situation.
Can I consolidate my student loans with my spouse’s loans?
Since July 1, 2006, married couples can no longer consolidate their eligible student loans in via a join Consolidation loan.
What else should I consider about when I should consolidate?
Regulations govern when you can and cannot consolidate your Student Loans. The loans you want to consolidate must be in repayment status or in the grace period to be considered. Consolidating the loans when they are in the grace period has immediate economic benefits. Federal loans created after July 1, 1995 were required to have a lower rate in-school and in the grace period compared to the repayment period. So if you consolidate these loans while they are still in the grace period, you can take advantage of rates that will be significantly lower (as much as.60%) lower than they will be once repayment starts.
Because you are creating a new loan that is based on the average of the old loans, it makes more sense to have the lowest rates possible when starting the process. If your loans are in the grace period and you wish to consolidate, you need to remember that once you have consolidated and the loan is issued, you will lose any remaining grace period (even if it’s a Direct Loan Consolidation) and payment on the loan will start within 60 days. This is why it makes more sense to begin the application at a later point in the grace period to take full advantage of the process unless rates increase significantly. (Many lenders will put the application on “hold” status until it gets closer to the end of the grace period. This will enable you to take advantage of the whole grace period and let you “hold” onto lower rates available prior to July 1, 2006.).
To add to the confusion, there are two different federal student loan structures, Direct Loans for example are made by the federal government directly, FFELP loans are made by private lenders but are guaranteed by the federal government. Students with loans provided in the Direct Loan programs are allowed to consolidate loans while they are still in school AND you are still able to obtain a 6-month grace period on their consolidation loan. FFELP loan holders on the other hand, are not allowed to consolidate loans while they are still in school.
However, many lenders who do FFELP loans will tell you that there are ways to consolidate your FFELP loans while still in school, by asking your lender(s) to put your existing loans into a repayment status. This does a couple of things for you; first, you would lose your grace period on the loans and would have to begin repaying right away, which isn't always ideal. But if you place the loans into repayment, they are now eligible for consolidation at the higher repayment rate. (See the .60% discussion above) so you may lose the benefit of a lower rate.
Am I eligible to consolidate my loans?
MAYBE - If your loan is in default. Generally, you must make special arrangements with your lender or use the Direct Loan Program using the Income Contingent Repayment Plan.
YES - If you have a new, eligible loan (see above) to add to an existing consolidation loan.
NO - If you are still in school and have not entered the grace period or repayment status.
YES - If your loans are in grace period or repayment status and the loans have been fully disbursed.
What about the subsidy on the Stafford loans I'm consolidating?
If you are eligible for interest subsidies on your underlying Stafford loans, they will continue to receive subsidy benefits on the portion of the consolidation loan that repays the original subsidized Stafford part of the loan.
What is the interest rate on federal consolidation loans?
The interest rate is equal to the weighted average of the loans you want to consolidate, rounded up to the nearest 1/8% with a maximum rate that is capped at 8.25%.
What are the benefits of Federal student loan consolidation?
For most borrowers, the biggest benefit of consolidating is simply being able to combine several student loans into a single loan with one monthly payment. The second benefit is that consolidating student loans often takes loans that were using a variable rate (rates that rise or fall according to government regulations and the economy) and provides a new loan based on a fixed rate that will not increase over time. This also allows borrowers to extend their repayment term beyond the original term of their existing loans, which gives a lower monthly payment. In some cases, borrowers can take loans with a 10-year repayment term and extend them up to 30 years, lowering their monthly payments by more than 50%.
Keep in mind that whenever you extend repayments, you are extending the time period on which interest is charged as well, and even though the payment will be easier, the total cost of the loan will usually be higher in the end. So you do pay more in the long run.
Are deferment and forbearance available on consolidation loans?
Yes. All Lenders may have different criteria or conditions that need to be met to qualify for deferment or forbearance, so you will have to check with your lender on the specifics of their policies, for deferment and forbearance.
Are there any fees associated with consolidating my federal student loan(s)?
No - By law lenders cannot charge a fee of any kind for consolidating federal student loans. Can a lender charge me prepayment penalties? No - By law, there are no prepayment penalties on federal loans.
Michael is a leading expert on Student Loans, Student Loan Consolidation and has valuable insight into how to reach your goals online. He has insightful Tips, Tricks, How-To's and Resources that are invaluable to Students and is also the author of Credit Repair Combat. He also is an expert online home business strategies that anyone can do, even without a website. You can check out his blog at http://www.millionaire-marketing-methods.com/
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