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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