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.
By: Ron King
Posts Tagged ‘Federal Student Loans’
Is Student Loan Consolidation Good?
June 20th, 20104 Student Loan Forgiveness Tips
May 23rd, 2010
Many college students are struggling to pay back student loan debt due to lower paying jobs and difficulty in finding a job in this economy. The average college student graduates with over $20,000 in student loan debt and many also have credit card debt. It can take an entire lifetime to pay back student loan and credit card debt if you just send in the minimum monthly payment. Some common solutions are to live below your means, work multiple jobs, work overtime or live at home with your parents for as long as possible. However, there is another alternative, student loan forgiveness programs. Here are 4 ways to pay off student loans.
High school math and science teachers, and elementary and high school special education teachers who agree to work in low-economic areas for five years can get up to $17,500 forgiven in Stafford loans. The teachers have to teach full time for five consecutive years. Visit the U.S. Department of Education website at studentaid.ed.gov and complete the Cancellation and Deferment Option for Teachers form to see if you qualify.
The Office of Personnel Management (OPM) offers a Federal Student Loan Repayment Program the allows any federal agency to forgive up to $10,000 annually for your federal student loans up to a maximum amount of $60,000. For further details call OPM at 202-606-1800 or visit their website at opm.gov/oca/pay/StudentLoan.
You can do volunteer work by joining the AmeriCorps, Peacecorps, or Vista. You can also get a job in a public service industry such as military service, public health, social work, emergency management, government, public safety, law enforcement, public interest law services, or child care. Visit studentaid.ed.gov for more information.
If you have a Perkins loan you can have the loans discharged if you served in the U.S. Armed Forces. If you served in a hostile area or war area you can get fifty percent of your Perkins loans forgiven. More information about student loan forgiveness programs can be found at the FinAid website at finaid.org.
By: Harrine Freeman
Federal Student Loans Suspended?
May 12th, 2010
The student loan industry faces many challenges. Lately, Federal subsidies have been cut back. This means that companies offering Federal student loans are no longer seeing a profit. Administering Federal student loans is no longer a viable option for most banks and other institutions. If they can only lose money by offering Federal student loans, then why should they offer them?
Many banks and institutions complain not only of the lack of subsidy money from the government, but also about the credit crisis. Subprime mortgage lending has run many banks into the ground. People are defaulting more than ever on home mortgages and costing the banks an arm and a leg. The rates have been affected all around. Credit is sometimes only being offered to only the best candidates and at a premium rate. Variable rates may be bound to skyrocket and many people will just be turned down.
Luckily, Congress just passed a bill to increase Federal student aid. This should increase the amount of money available to students, but it could be harder to find. The government subsidy money paid to financial institutions for administering Federal student loans has been significantly reduced. The subsidies had to be reduced in order for the government to have the money to lend, but the result is that many institutions can no longer afford to administer Federal student loans. The subsidies have not been taken away all together, only reduced. This was done to eliminate the taxpayer funded inflated profit being made by the lending institutions.
Many institutions will still offer Federal student loans and private student loans, but they may come at a higher price, require higher credit ratings or you may need a cosigner to qualify. Interest rates may have to go up to cover the cost. These types of loans are normally backed by bond securities, which investors are now turning their noses up at due to the credit problems today’s market is experiencing. All of these things combined are affecting student loans through a virtual domino effect.
All of this just means that you will need to be more diligent in your search for the student loan that is right for you. Although incentives and special circumstance loans are waning, you can still find student loans that meet your needs and bridge the gap between what you have saved and what you owe. Many people are finding that the internet is an invaluable resource when searching for student loans. Now you can go to sites such as http://www.student-loans.net and compare loans from multiple lenders. Unbiased information may be hard to come by at an individual bank or school, so do your research before you take on a Federal student loans or private student loans.
By: Evelyn A. Saunders