Student Loan Consolidation

A federal student loan consolidation program is a federally regulated loan that allows you to combine all of the existing federal loans you received for your education into one new single loan. When you do a student loan consolidation, the new lender will arrange to have all your existing loans fully paid off and issue you one new loan. Generally there are no application fees or credit checks required for consolidation loans and by consolidating your loans you can benefit in the following ways:

• Lower monthly payments. By consolidating your federal student loans, you can take advantage of lowering your monthly payments which will give you more money to use for other expenses such as rent or mortgage payments, food and car expenses, utility expenses, and credit card payments. Depending on your balances, you might be able to reduce your monthly payments up to 45%.

• One payment per month. If you currently have loans with multiple lenders, you know the hassle of having to write several checks per month, each for a different amount and to a different lender. By consolidating, you eliminate the need to make multiple monthly payments. You will only have to write one check or make one payment each month!

• Lock in a low fixed interest rate. Currently, unconsolidated federal student loans have a variable interest rate which changes each year. By consolidating, you can lock in a fixed interest rate which remains constant through the life of the loan.

• Customize a Payment Plan. By consolidating your student loans, you have the opportunity choose a payment plan and payment term that fits best with your current income. In some cases you can take up to 30 years to repay and you can change the plan annually without any penalties. In addition, if you decide you would like to repay your loans early, there are no prepayment penalties.

• Maintain your deferment and interest subsidy benefits. By consolidating your loans, you do not give up your deferment options or interest subsidy benefits on any subsidized FFELP or subsidized Direct loans that you consolidate.

When Should I Consolidate

You can do a student loan consolidation during your grace period or during repayment. You might even get to do a consolidation before you graduate. The timing depends on a variety of factors.

• Consolidating during the grace period may get you a lower rate
• You don’t want to consolidate too soon after graduation. If you do, you might lose out on some interest subsidies
• If you think interest rates are low, you might lock in the rate
• If you want a lower monthly payment today, you might try to get an extended repayment plan

Federal Loans Eligible for Student Loan Consolidation

Many federal student loans already have a low interest rate. However, you may be able to achieve a lower payment by consolidating these student loans. Here is a list of federal loans that are normally eligible for student loan consolidation:

•Federal Stafford Loans
•Federal Direct Loans
•Federal Perkins Loans
•Federal Supplemental Loans for Students (SLS)
•Federally Insured Student Loans (FISL)
•National Direct Student Loans (NDSL)
•Federal Parent Loans for Undergraduate Students (PLUS)
•Loans for Disadvantaged Students (LDS)
•Auxiliary Loan to Assist Students (ALAS)
•Health Education Assistance Loan (HEAL)

Student loan consolidation could benefit you, but evaluate the amount and types of student loans that you are carrying, and then see if you can consolidate and cut your payments and debts.

Student Consolidation Loan: How Consolidating Student Loans Can Keep You Out Of Debt

The repayment of Federal student loans generally begins after the borrowing student has completed his or her education and an additional grace period after that. However, due to various reasons students opt for student Federal loan consolidation. However, there is certain eligibility criterion that you must fulfill and a process that you must follow before you can be entitled to Federal debt consolidation of student loans. Again, it is important to note here that such processes and criterion might be reviewed and revised from time to time. So, it’s important that you check on them with the concerned authority.

As per the Higher Education Reconciliation act of 2005, the eligibility criteria for student loan consolidation by FFEL and Direct Stafford loan borrowers has been defined a bit differently. Now, such borrowers will not be eligible for consolidation loan if they are still studying i.e. they are not eligible until the time they leave school or graduate or have enrollment that is less than half-time. For PLUS loan borrowers, the consolidation eligibility begins as soon as the full disbursement has happened.

Private student consolidation loan is a low interest student loan. People having outstanding non-federal education-related expenses can apply for this loan. But he or she should be a holder of US citizenship. If not, the applicant must at least be a permanent resident.

Generally, the minimum loan amount is $10,000 while the maximum amount that can be borrowed is $250,000. The amount also decides the repayment periods. If the amount borrowed is below $40,000, the repayment period is fixed at a maximum of 20 years. However, if you borrow more than $40,000, you can enjoy a longer repayment period of up to 25 years.

This student loan consolidation is quick to get approved. The interest rate on private student consolidation loan is the prime rate and is adjusted on a monthly basis. The interest rate is also dependent on the credit record of the borrower. A good credit record will attract a lower interest rate. As such, the interest rate is variable.

The prime rate is 7.0 percent (at the time of writing this article). Initially the margin may vary between 0 percent and 9.90 percent and is adjusted based on the changes in the margin adjustment index.

This student loan debt consolidation can be utilized to consolidate all debts relating to education, which also include private loans as well as federal student loans. If you want, you can consolidate for more than one child. Spouses have the choice to consolidate multiple loans into a single consolidation loan.

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Is Student Loan Consolidation Good?

Consolidating your student loan(s) is one of the smartest things that you can do. You should consider a student consolidation loan if you have several federal student loans or even just one large one.

Student consolidation loans will have fixed interest rates which are similar to those of the loans that are being consolidated. The amount that you can save through consolidation can be up to 58%.

Federal Stafford loans, Federal Direct Loans, Federal Perkins Loans as well as many others can be consolidated. Most of the time, they already have low rates.

Advantages

- You will have a single loan payment which is often lower than what you currently pay.
- It is easy to set up.
- It will help lower your debt burden.
- You can secure the lowest interest rate at the time.
- It can help you qualify for new or renewed deferments.

What To Consider

When you consolidate, make sure that the interest rate that you are offered is lower than your current rate. You want to pay off your student debt easier and maybe quicker too.

While consolidation can simplify the loan repayment process and lower your monthly payment, in the long run it usually increases the total amount that you will have to pay.

Student loan consolidation provides lower monthly payments by allowing you to spread the loan over 30 years in some cases. You are paying more payments, so be sure to compare the total cost of repaying your unconsolidated loans with the cost of repaying them through the consolidation loan.

The process of consolidating is very flexible. Consolidation is available from before you graduate down through years of repayment.

First, you need to gather information about your current loan. You need to know the balances and the interest rates, the names and addresses of companies and the names and addresses of personal references. The National Student Loan Data System can help provide you with the information that you need since it holds the most complete and accurate information for federal loans.

Paying Them Back

You will have 2 options to pay these loans back.

1. Pay a standard amount each month. This will include principle and interest. This is the lowest cost of interest paid way to go.

2. Or a graduated repayment. Here you start with lower payments that are only interest, but then they will keep increasing.

Usually repayment of your consolidation loans will begin in 60 days and will take from 10 to 30 years to fully pay back.

There are some questions that you should ask the lender before going forward.

- is there a rate reduction, for example for making your payments online or on time?

- does the loan meet your specific needs?

- is that the best interest rate available?

To get a student loan consolidation, you can still be enrolled in school or graduated. Either way, you'll find many lending options that will fit your needs.

Student Loan Consolidation And Government Student Loan Consolidation

One of the best investments that a person can have in his life is education. You have to pay for that high college education so that you will be able to get higher paying job. Most students avail of these student loans available to them and that suits then. But many of the people hesitate to consider student loans because of the interest that these loans incur through time. A solution to this is student loan consolidation. Your federal student loan can be consolidated just like your personal student loans. You have to keep in mind though, that your federal student loans and your private student loans must not be consolidated into a single student loan debt.

To have your loan consolidated, you have to make sure that you have $5,000 balance. A six month grace period is given after you finished studying if you want your student loans to be consolidated. If you are already paying for your student loan you can still go for a debt consolidation for your student loans. If you have federal student loan, you can apply for a government student loan consolidation. In order to qualify, you should have taken more than one federal student loan. A good credit rating can qualify you for a government student loan consolidation. Also, you can make your payment easier and more efficient. You can consolidate your subsidized and unsubsidized student loans amortizations. This will enable you to pay in a single transaction every month.

The benefits of a consolidated government student loans are endless. In this way, you can manage your payables more efficiently. You do not need to exert a lot of effort in paying the scheduled fees for several loans. All you have to do is consolidation it a single payment for the entire loan while you were still in school. One best attribute of these government consolidated student loans is that, you can pay your student loans over a certain period of time that is long enough compared to private student consolidation loans available. In connection with this set-up, you are only obliged to pay a smaller amount every month in a staggered mode. The monthly payment bill is calculated with the interest rate, repayment duration and the total loaned amount.

The repayment time for government student loan consolidation can be as long as 30 years. Despite the smaller amount you pay for the repayment period, you are advised to pay the entire amount as soon as you are able to otherwise, interests add up as you prolonged your full payment.
Low payments, low interest rate and easy payment method are just some of the benefits you can find with government student loan consolidation. Interest rates for student loans are at its lowest percentage. Thus this is the best time to take student consolidation loans for a college degree you are dreaming of.