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Student loan consolidation can offer you a convenient way to pay back your college loans by combining all your college loans together into one monthly payment. In most cases, payments can be greatly reduced by as much as 50%. Student loan consolidation can offer you a convenient way to pay back your college education. You can set your own repayment schedule with the consolidation service that you choose. Often as a college student you don't realize the debt that you are accumulating until after you have received your degree.
Private student loan consolidation can combine all your private college loans together so that you can pay back your loans in a highly efficient way. You will have an easier time managing your loans when you look into a private loan consolidation service. All your private student loans will have their interest rates greatly reduced when a private loan consolidation service is used. Enrolling in this type of service is a responsible way for you to manage your college tuition repayment costs.
A student loan consolidation service can offer a stress free way to payback your college education. You will not have to worry about managing several loans when all you need to focus on is one low monthly fee.
Some student loan consolidation services even offer cah back options and rebates.
The process to consolidate you student loans will vary depending on whether you are doing it through the Department of Education Direct Loan Servicing or a private lender. Often the process may start by reviewing the criteria in place to see if your loans will even qualify to be included in a consolidation. While a consolidation loan can include all federal student loans, some programs require a minimum loan balance or a minimum number of loans be included. There also may be a requirement that you already have an existing relationship with the student loan servicer. Typically the loan consolidator will offer options to borrowers regarding automatic payments (electronic debit); incentives for timely monthly payments; and, repayment plans.
It is not just the federal government who will work with you to consolidate your student loans. There are also a number of private student loan consolidation options available. If you have student loans, once you enter your repayment period many of these private companies will regularly send you notices in the mail encouraging you to apply for a student loan consolidation through them. There are a number of private banks and student loan companies who are willing to work with you on consolidation loans. Since there are so many options available through private sources, before deciding on one shop around for the best interest rates and repayment options to suit your needs.
When you have multiple student loans, the repayment dates on each may be at different times of the month. There is also the possibility that each is being paid under different repayment plans. Using a student loan consolidation calculator, you can explore different payment options to lower you monthly payment if you decide to apply for a government student loan consolidation. Other benefits of a student loan consolidation include retaining options to defer your student loan payments if the need arises and your circumstances qualify you for a loan deferment. In addition, if you have defaulted on your student loans, obtaining a student loan consolidation may help lower your monthly payment and restore your credit history.
The student loan consolidation process requires you to obtain much of the same information you would need when applying for any loan. Get student loan consolidation information from your lender before completing the application so you are prepared and can complete the process quickly. Typically you will need the following information:
1. Your social security information – this will allow your lender to check your credit history, if needed.
2. Employment information – this will include employer name and address; length of time employed; job title; and, salary information.
3. Your date of birth.
A federal student loan consolidation service can provide convenience and flexibility. As a recent college graduate, you can use consolidation services to combine all your government student loans into one low payment. You will be able to set a repayment schedule that is manageable. Work with federal loan consolidation services to set a payment plan that you will be able maintain. In many cases by consolidating your student loans, you will be able to reduce the costs of your federal student loans by 50%.
It is important to carefully consider federal student loan consolidation companies when you plan to apply for this type of service. Look for a consolidation company that has a history of successfully helping people manage their government student loans. Read consumer comments and find companies that are highly rated.
A federal loan consolidation service can help you manage your finances. You will have instant relief by using this type of service to pay your government student loans. In addition, you will be able to manage your other bills and save more money when you use a federal loan consolidation service. Often when you are a student in college you need to take out several loans so that you can pay for your education. You can get help with this type of service to mange your finances more effectively.
Many people who attend college have to obtain a student education loan in order to pay for their education. Rising education costs have made it very common for college students to obtain several loans. The benefit of taking out this type of loan is that students will have an easier time paying for your education. A student education loan can be obtained easily. There is no credit check done when issuing an education loan to a student. In addition, a loan for college can provide a student who did not have enough money to go to college by loaning them the necessary funds. As a result, students can have more opportunities.
Sometimes when college students graduate they can become overwhelmed by the amount of debt that they have accumulated. These people will have an easier time paying off their student education loan if they use a school loan consolidation service. This type of service can help students save up to 50% on the cost of their loan. In addition, if a person has had to take out several education loans, a school loan consolidation service can help combine the payments into one low monthly payment. In addition, individuals can set their own time limits for paying off their student education loan. This can make paying back those needed student education loans easier.
If you have student loans, you're not the only one who's probably considering student loan consolidation. A lot of people have loans and more people are about to, because there's been a 'back to school' rush in the face of a struggling economy. So many students are using a buy now, pay later mentality about their education that generally works well - but only if the students are able to get jobs in order to pay back their loans. Of course, they can also consider deferments. These help in the short-term, but ultimately they only delay the inevitable need to pay the loan back.
Personal student loan consolidation is a great way to reduce debt, because the interest rates on these loans are often better than the original rates were. Student loan consolidation is also good because you won't have a bunch of payments to make. You'll just make one payment each month, and it will go to one loan - instead of two or three or more. Both private and federal loans are available for personal student loan consolidation, so it's well worth checking into if you want to lower your debt and reduce your interest rates and payoff times.
student loan consolidation' and additiional keywords: personal student loan consolidation
College loan consolidation offers individuals a convenient way for you to pay back any outstanding college bills. These types of consolidation services work by combining all your college loans into one combined bill that is offered at a low monthly rate. By using college loan consolidation services, you can pay back your college loans more efficiently and it will make it easier for you to manage your finanaces. In many cases, the college loans can be greatly reduced by as much as 50%.
When you choose to use a college loan consolidation service, you can pay back any debt you have from your education, by using a convenient payback schedule. Often when you are a student you have no knowledge of what you are doing to your finances when you continuosly apply for college loans to pay for your education. It is only when you get out of college that you realize you need to find employment just to pay back your college loans. By applying for a college loan consolidation, you will be able to pay back your loans in a way that is easy and manageble.
When looking for a a college loan consolidation service, it is important to examine perks. Examine any cash back options by looking into what student loan consolidation rebate are available from various companies.
Student loan consolidation rates are federal and consist of subsidized and unsubsidized Direct and FFEL Stafford Loans, Direct and FFEL Plus Loans and many more. If your education is private, your eligibility for consolidation rates will be nonexistent because a private education is simply not eligible by any company for consolidation.
If you happen to be in default, certain requirements on your behalf must be met before you can consolidate loans. A plus loan is also very popular under consolidation rates. A plus loan is offered to the parent or a graduate or professional student enrolled in a professional course of study. However, a plus loan cannot be transferred to the student.
This means any student applying for loan consolidation can never include their parents plus loan. There are many complex issues regarding student loan consolidation rates, it is best to contact the Direct Loan Organization’s Consolidation Department at 1-800-557-7392. The best website to visit it www.loanconsolidation.ed.gov.
Stafford, PLUS, and Consolidation loans come directly from the U.S. Department of Education under the Direct Loan Program.
Student loan consolidation rates are ideal for any student because it turns your student loans into one master loan, which makes payments a bit easier. Your monthly payments will typically be reduced to fifty percent. The loan consolidation process is one everyone will have to go through.
Loan consolidation deals directly with direct consolidation loans, which allows the student to combine multiple federal student loans into one loan. As a result of this, one easy monthly payment will be made versus multiple monthly payments. It is important to make sure loan consolidation is the best option because many factors exist from it.
Many companies who specialize in loan consolidation blind students by the fact that there monthly payments will decrease. Many students are blinded by this fact and don’t think long term.
Long term, the total cost of repaying your loans will usually increase if one chooses the monthly payment process. Many simply do not care because they figure by that time they will have a steady job. This is usually the case but it is important to keep this fact in the back of your mind, companies will still make their money from you.
The interest rate of current student loans determines future student loan consolidation rates. Federal student loans are either subsidized, or unsubsidized. Interest rates on subsidized loans are typically lower than interest rates on unsubsidized loans. Student loan consolidation rates are determined by calculating the average rate of existing loans.
For example, you receive a subsidized loan for the 2010 – 2011 school year with an interest rate of 4.50%. Then, you receive an unsubsidized loan for the 2011 – 2012 school year with an interest rate of 6.80%. After graduating in 2012, you decide to consolidate your loans so that you have one monthly payment instead of two. Your college loan consolidation interest rate is going to be somewhere between 4.50% and 6.80%. It is calculated based on the amount of each loan. If the loan amounts are equal, then the student loan consolidation rates will be approximately 5.65%.
Direct college loan consolidation is best for people with all government loans. The federal government will consolidate all of your student loans and will offer the lowest interest rate. However, if you have both private and government loans, then you may want to consolidate with a private, financial institution that can still offer you one monthly payment, but at a somewhat higher interest rate.
The first thing one needs to know about student consolidation rates is they are federally regulated. They exist to reduce the monthly payments on student loans. Different interest rates exist depending on one’s financial situation, it could be up to 20 percent more or less each month.
The weighted average of student loan interest rates are what federal student loan consolidations are based upon. In the current academic year of 2010-2011, the standard subsidized rates are 4.50 percent while unsubsidized graduate rates are at 6.80 percent. The other unsubsidized graduate rates for the academic terms of 2010-2011 are expected to stay at 6.80 percent.
This is mainly because federal student loans will have different rates due to type and reimbursement rates. The Federal Stafford subsidized and unsubsidized loans will change yearly but luckily never exceed 8.25 percent. Private student loan consolidation rates are also an option because they lower monthly loan payments by combining private student loans into a manageable loan. The Federal Stafford loans should be your first option if you qualify, if you do not explore private financial institutional to consolidate student loans.
Timing is very important when it comes to anything related to student loans. Consolidation is just as time-sensitive as anything else. Some lenders require up to 30 days to process your application.
Federal student loan rates remain the same from July 1 to June 30 of the following year. Then they can either go up or down. If you apply for a consolidation loan and that application is not processed before July 1, you will be saddled with the new rate, regardless of whether it has gone up or down.
The U.S. Congress passed the Budget Reconciliation Act of 2005, effectively eliminating the grace period that would have avoided problems like this.
So time your loan applications accordingly. If the rates are said to be decreasing it might be a good idea to wait a little bit. If you know they are going up make sure to file your application before the start of June so you do not get caught in the crossover.
This is one of many reasons why starting the process early is beneficial. Procrastination will only complicate matters.
Private student loan consolidation does not mean that you are having financial trouble and need lower monthly payments. For some people it is a matter of convenience, not wanting to juggle four or five different payments every month.
It is an easy way to keep things organized and make everything easier to follow. There is less confusion if you are making one payment rather than trying to remember which lender you paid and which one you still owe.
Lenders also offer a wide spectrum of discounts and incentives on private student loans when you consolidate. If you apply with a credit-worthy cosigner it can get you a lower interest rate.
Most lenders then allow you to remove the cosigner from the account after a certain number of consecutive on-time payments (usually 36 or 48). This way you can lock in a better interest rate than you might have gotten on your own with minimal responsibility on the part of the cosigner.
Some lenders for private student loan consolidation also offer interest only payments for the first 24 months, lowering your monthly payment even further for that period.
The interest rates on federal student loans change every year in July. Before each summer you will be able to find out if the rates will be going up or down. If they are going up and you consolidate before then you can lock in the current lower rate.
This is not the only thing you should know going into consolidation, however. A great tool at your disposal is the student loan consolidation calculator. You can find one on virtually any Web site that offers a wide array of student loan information.
The calculator will ask you for information pertaining to the loans you have taken out. It will then provide you with the total amount you have taken out in loans, what your new interest rate and monthly payment would be, the length of the repayment period and the total cost to you (assuming you use the entire repayment period to pay off the loan).
Now you know what you are facing when choosing a specific consolidation loan. You will see exactly how much money you will be paying. This will give you a blueprint of your financial obligations, both short and long-term.
One of the great things about student loans today is that you have options that were not available just a few years ago. Never assume that you are completely locked in. Do your research and find out where you stand.
For example, just because you used one company for your loans does not mean you have to use that same company when you are ready to consolidate student debt. On the contrary. It is your right to consolidate student loans with any lender you choose. If you started with Company X but Company Y offers a better deal, go for it.
So go out on the hunt. Compare interest rates and other incentives before you decide to remain with the same company your original loans came from. Consolidating college loans is where you are supposed to save as much money as you can. Be a bargain shopper instead of someone who buys the first thing they see.
Many lenders will have a minimum balance requirement for a consolidation loan. If your balance is lower than their figure, look around until you find one that's right. Every borrower has specific needs when it comes to consolidation and there are enough lenders out there that finding the right one is always possible.
Married students were at one time able to consolidate school loans together. This was changed as part of the Higher Education Reconciliation Act of 2005, which went into effect on July 1, 2006.
While this was seen as unfortunate by many, there was a very good reason for this provision. Once a married couple had consolidated college loans, each spouse became legally responsible for the full amount of the new loan rather than their individual portion of it.
In the event of the couple getting divorced, there was no way to separate the account into two parts again. This would give lenders headaches trying to get repaid, and would cause problems for the borrowers too.
If your ex-husband or ex-wife failed to make a payment, you would be in default and subject to adverse effects on your credit report. If a spouse were to die, the remaining one would be responsible for the entire amount too. With separate loans, a spouse's debt is forgiven in the event of their passing.
Thus, any loans taken out after July 1, 2006 are not eligible to be consolidated with a spouse. So if you are married and refinancing your student loans, choose the packages that make it affordable to make the monthly payments on both your loans.
Parent PLUS Loans are taken out in the name of the parent or legal guardian of the student. This means that they cannot be consolidated with loans taken out in the student's name, since all loans must be associated with the same Social Security Number. This can sometimes discourage people from applying for these types of loans, but do not let it.
For those parents who have multiple PLUS Loans, have no fear. You can still consolidate, just not with loans in the student's name. In fact, you will automatically get a .25 percent rate reduction on your consolidation loan. All PLUS Loans disbursed after July 1, 2006 have a fixed 8.5 percent interest rate. However, new federal consolidation loans have been capped at 8.25 percent. So by rolling all of your loans into one, you not only reduce your monthly payment, but you also reduce the interest rate too.
Another added benefit of the Parent PLUS Loan is that you do not have to wait until your child graduates to consolidate. You can do so at any point in time after the final loan disbursement has been made for the academic year. Consolidating PLUS Loans is really a no-brainer.
Chase Tip: When you decide to consolidate student debt, you will have to provide personal information to the lender as mentioned above. However, there are a few other things you will need to provide to your lender when you consolidate student debt. Be prepared to provide references. These will need to be people who know how to contact you in case you should fail to make your monthly payments. The lender will also need information on student loans to be consolidated. This includes type of loan, amount owed, and loan ID or account number.
Before you apply to consolidate all of your student loans into one monthly payment, be aware that there are times when it may not be worthwhile. You need to consider what benefits you will lose through consolidation. Many student loans have special borrow benefits already applied that will not transfer to your new student loan debt consolidation. Interest rate discounts or rebates to the student loan principal may be lost. In addition, when you consolidate college loans if you are adding a Perkins Loan to the mix, you could lose the any loan forgiveness options that are available. Weigh carefully your new monthly payment against the potential lost benefits.
If you have a number of outstanding student loans, it may be easier to manage the debt if you combine them into one loan with one monthly payment. This is known as a student loan consolidation. After reviewing student loan consolidation rates, you can consolidate federal student loans that have variable interest rates and convert them into a fixed rate loan for a longer period of time. This can help you lower your monthly student loan debt obligation while ensuring that the payment will not increase because of a change in the interest rate.
If you go through a private loan consolidation company, they will typically consider all loans used to finance a college education for consolidation into one monthly payment. This is not true for the federal government. Typically, government student loan consolidations are limited to only federally funded student loans. If you are interested in doing any type of loan consolidation, contact your student loan servicing agency or a private lender to discuss their guidelines to know what loans can be included in a student loan debt consolidation.
Once your student loans enter the repayment period, you can apply for a student loan consolidation. You may also be able to consolidate some loans that are not in repayment. You would need to check with your lender to see if your loans can be included in a consolidation loan. This includes adding new loans—those disbursed within 180 days of completing the consolidation process – to the balance. Be aware, however, that once your loans are consolidated, you can not cancel the consolidation process. This is because once it is complete; your old loans have already been paid off. In addition, you sign a promissory note guaranteeing the new consolidation loan.
The interest rate charged on your federal Stafford Loans currently have variable interest rates. An advantage to consolidating these types of loans is that the consolidation loan will have a fixed rate. There is no “set” rate that you would be offered, instead it is determined by taking the weighted average for the interest rates currently charged on the loans you are wanting to consolidate. The rate for these federally funded student loans will not exceed 8.25 percent. A PLUS Loan consolidation will not exceed 9.0 percent. If you have student loans through a private lender you want to consolidate, the interest rate will vary depending on your student loan consolidator. Typically, the interest rate offered through the federal government for federally funded consolidated loans will be lower than rates charged on private consolidation loans.
There are a number of repayment options you can choose from after consolidating your student loans. Not only can you select terms that allow you up to 30 years to repay the balance but the amount you pay each month can be established. These are very similar to options you selected when you started the repayment period on your student loan and include:
1. Standard repayment plan – equal payments over a 10 year period.
2. Extended repayment plan – equal payment over a longer period, up to 30 years.
3. Graduated repayment plan – over a period of up to 30 years, payments start out low and gradually increase.
4. Income Contingent repayment plan – monthly payments determined based on your income (periodically reviewed) and paid over a period of up to 25 years.
Once you begin repayment on your consolidated student loan, you have options on how you make your monthly payment which include an automatic electronic debit from your bank account or mailing a check each month. An electronic debit means that you will no longer receive paper statements in the mail and may qualify you for an interest rate deduction of 0.25 percent.
|Jennifer Mathes, Ph.D.|