Consolidate Student Loans and Simplify Your Finances

The big problem most college or university graduates will have to surmount is student loan. They may have heard that consolidating student loans makes the management easier with a chance to get better terms. 1. The Better Circumstances To Consolidate Student Loans Typical students are not wealthy. The ones who have excellent credit scores can have the chance to get cheap loans from the bank. These loans are taken under a circumstance where a student has no income or any guarantee that he will get one in the near future. What then happens with the loans consolidation? There is a grace period. This is the time to consolidate student loans. It is the period after graduation, when the loans consolidation has to be made because thereafter it becomes more expensive. The fortunate thing is that at this point, many graduates have got a job and thus better credit scores. 2. What Does A better Credit Score Mean? Better credit score simply means cheaper loans. The interest accrued is the price the graduate has to pay to money loaned from the bank. Banks categorize borrowers into a different order according to the risk they attach to them. A borrower with a good track record and high credit score is a low risk customer to the bank, which means lower interest rate. 3. Is Getting A Longer Payment Time The Wiser Choice? The temptation to get both a lower interest rate and a longer payment time is great, because they decrease the monthly payments by several hundreds of dollars. But the general recommendation is that a graduate pays the loan back as soon as possible because the longer time he has to pay, the more interests he pays in the end. 4. Can Federal Student Loans be Consolidated With The Private Student Loans? No. What you can do is to consolidate loans all the federal together and do the same for all private loans. This rule is based on the fact that the federal loans have benefits coming from the tax payers and they are not allowed to be mixed with the private loans. 5. What Is The Maximum For The Loans Consolidation? If you want to consolidate federal student loans, you are allowed to include any Direct Loans and FFEL up to the remaining balance of these loans. After the loan has been consolidated, they will be paid away and you start to pay your new loan following the agreed schedule. The private loan consolidation follows the agreement between the borrower and the lender, so you need to hear the terms directly from the private lender.

Debt Avoidance through Student Loan Consolidation

You should consider taking advantage of student loan consolidation if paying off your student loan is starting to become burdensome. If you choose this option, you minimize the burden you have to go through. The fear of applying for student loans is the major reason why a lot of people who opt not to go to college. Yes, getting a degree gives you more career opportunities but it comes with a price because you become indebted before you even get your career off the ground. This is the pitfall involved with these loans. That is why most persons wouldn’t want to go through loan application. Who wouldn't rather think of his or her future rather than thinking of how to pay off debts? Wouldn't you prefer to think of saving up for the future instead of saving up to pay for loans? While this is a reality for a lot of people, thankfully, there is a way to get out of this - a way that will make it easier for you to build a brighter future. This is achieved through student loan consolidation. With this option, you are guaranteed that you are not burdened. You don’t have to worry about being in debt before you laying the foundation of your future. How does loan consolidation work? You may have thought that the interest rates were within your grasp. However, the current reality of the economy has changed things for you. The high paying job that you were expecting to sustain the payments may not have materialized. Right now, student loan consolidation is essential. Through loan consolidation, you get to modify your previous agreements. A way to restructure your loan is by lowering the interest rates. By lowering the interest rates, you give yourself a little more breathing space. This way, you make things more affordable. This does not end here. There is another thing consolidation can do to make things easier for you. This is done by lengthening the duration of payment from a few months to a few years. This way, you get to stretch out your income more. You will have more to spend on. With student loan consolidation, you are given more room to build a brighter future. Interest rates are lowered, and the time it takes to pay off the debt will be longer. Lastly, you assured a healthy credit status. The downside is that you will have to pay more since the length of time is much longer.

Student Loan Consolidations Companies – How to Select the Best Loan Consolidation Lender

Consolidating your student loans is a way of merging together all the loans you took from different lenders under a single student loan consolidation company. How do you select the best consolidation lender that will offer you the best repayment terms? Picking the wrong consolidation lender will hurt your budget and general economy. It is very important to follow some guidelines to help you choose the best consolidation company for you. Private against federal If your prior loans are from a federal source, you will be on the lookout for a federal consolidation. Federal loans are more convenient than the private ones due to the lower rates of interest. If the loans to consolidate are from a private source, you will usually go for the private consolidation lender because the federal company will not offer you a good interest rate for consolidating private loans. The reason for choosing this way is that interest rates and terms vary for both. Although some private lenders may offer you amounts that consolidate most of your debt, you should always go first for the federal company if most of the loans you need to consolidate  are federal. As a rule of the thumb, getting loans from private consolidation lenders mean meeting more requirements than from the federal ones. Private lenders base their loans on creditworthiness and will be looking more at your credit score - if you have any or the co-signer you present. Interest rates Interest rates are determined by private lenders based on two factors: the standard rate used for loans, (LIBOR) and your credit score. A higher credit score means a lower interest rate that will be applied. Your aim is to try to find a consolidation lender that will offer the lowest interest rate possible. Interest rates can be fixed or variable. The first is the preferred choice. Not all federal lenders are offering consolidation loans now but the ones doing so calculate interest rate as the weighted average of the individual interest rates of the loans being consolidated. Terms and conditions Aim at finding a lender that offers you the best terms in relation to: a) Loan Amounts – Choose the lenders that can offer you a loan that covers all your debt. b) Fees, usually determined by your credit score. These are usually application fees and origination fees - fees applied to issue the loan. c) Deferment  - the  period of time between the time you take the loan and the time you start repaying. d) Repayment term - the length of time to complete the repayment. e) Check if co-signers are required.

Student Debt Consolidation Loan - The Advantages and Disadvantages

As valuable as higher education is, it is very expensive and not within everyone’s reach. Everything has to be paid for - from accommodation to tuition fees and books. In achieving your dreams and going to the university you’ve always wanted to, student loans come in handy. Their interest rate is lower than the normal interest rate and the repayment time is also much higher. A lot of times, we take more than one student loan to help us with our fees during college. Paying up the interest for different loans is a daunting task and student debt consolidation loans come in handy. A student debt consolidation loan is a loan in which all other smaller student loans are merged into one big loan. The student then has to make one payment every month. Also, there is only one repayment period and one due date to make the payment. The interest on the loan is also significantly lower and you can save you money monthly. Student debt consolidation loans are of two types - federal student consolidation loans and private student consolidation loans. The advantages of student debt consolidation loans: 1. The interest rate on the loans is fixed and it has a much lower rate of interest than the combination of other loans. 2. There is just a loan to pay off thus making remembering the due dates easy. 3. There is an extended time of repayment of the loan and this can be up to 30 years. 4. The time frame to pay off the loan increases while the amount that needs to be paid off every month also reduces significantly. 5. There is no need to pay any extra fee to consolidate these student loans. 6. The loan application process is also much simpler and no penalties exist for  paying back early as well. Disadvantages of the student debt consolidation loans: 1. Extended payment periods make it seem that little payment is flowing out of your account but you will end up paying much more than you borrowed. 2. The rate of interest is higher in the consolidated loan than the other individual loans sometimes. In this case taking a consolidated loan is more of a disadvantage. 3. When taking a consolidation loan, consider the remaining tenure on your various loans for the purpose of consolidating your payments into one. If most of your loans are nearing the tenure completion, you would not gain from consolidating such loans. 4. Consolidating the loans within the grace period will require you to pay it off immediately. A lot of students have been helped by student loans in pursuing their dreams to become what they are today and student debt consolidation loans helped them lessen the financial burden to a large extent.  The pros and cons must be evaluated carefully before deciding to consolidate the student loans.

Student Loan Consolidation - Five Things to Know

Upon graduation, many people find themselves struggling to pay two or more student loans. The result is that it becomes difficult to stick to a budget and without incurring late fees. A strategy that will help to get these multiple bills under control is the student loan consolidation.

Student loans can taken from different institutions, each with its different interest rate. Some may require a co-signer while others do not, payments days vary in a month, and other terms and conditions may vary wildly.

A payment, on a definite day, to an institution, with an interest rate, with a set of terms and conditions, could make life much easier and budgets much more manageable. This is the major benefit of loan consolidation. The five items should be considered when deciding whether or not to consolidate your student loans.

1. Minimum Amount

An outstanding loan debt of a minimum of $5000 must be owed to qualify for most student loan consolidations.

2. Continue Payments

The wise thing to do when applying for a student loan consolidation is not to stop regular payments to the several institutions you took the loans from. The consolidation process takes about forty-five days. If you make no payments during this time could severely hurt your credit rating and have your consolidation institution rethink offering consolidation.

3. Removing Co-Signers

Get Dad or poor Aunt Joyce off as co-signers on your student loan contracts now that you are employed. This is possible if you have proven your creditworthiness by making prompt payments in the last two to four years (depending on the terms of the original individual contracts). Make this happen before taking your first steps toward consolidation. Also check with the loan consolidation institution that you are using.

4. Consolidation Issues

To get the best loan consolidation deal you have to shop around. Several important questions have to be answered before you pick an institution for a student loan consolidation. Here are some:

·         What is the interest rate?

·         Does the consolidation require an origination fee?

·         Can I pay more each month without exacting any penalties?

·         Can I pay off the entire loan early without exacting any penalties?

·         What are the terms and conditions? Specifically, size of payment, day of month the payment is due, duration or maturity of the loan. It cannot hurt to negotiate for some thirty to sixty days before the first payment is due.

5. Last Points

The supreme goals of a student loan consolidation are to reduce monthly payment, establish an acceptable interest rate, have only one payment, and clear all others from your loans. When you establish the duration of your consolidation, consider seriously the income and expenses you will be incurring in the future. Do you see yourself having children or buying a home?

For majority of young folks, student loan consolidation is wise mainly for one reason - a manageable monthly payment.

Federal Loan Consolidation FAQs – Part 2

Finding Your Federal Loan Lenders

Prior and current federal loans, including prior consolidation loans, by accessing National Student Loan Data Systems (NSLDS) may be found at http://nslds.ed.gov. The website has information on loan amounts, outstanding loan balances, loan statuses and disbursements. To access your records on the NSLDS web site you need to provide your social security number, the first two digits of your last name, your date of birth and your FAFSA PIN number.

Federal Loan Consolidation Repayment Options

·         Standard Plan - allows you to make equal payments over the term of the loan. Every payment includes both principal and interest. This loan has the highest initial monthly payment, but results in the lowest total interest paid over the life of the loan.

·         Graduated Plan - allows your payments to start out low and increase over time. It allows for interest-only payments for the first quarter or third of the total repayment period, followed by increased payments for the term of the loan left.

·         Income-Sensitive Plan - bases loan payments on a percentage of your gross monthly income and the amount borrowed. Repayment term varies based on the percentage you request, your income, and the total loan amount.

·         Extended Plan - you can repay your Federal Consolidation Loan over a 30-year period, on a fixed or graduated payment plan, if you have federal loans totaling in excess of $60,000.

When Does Repayment Begin?

Immediately your loan is been funded, you receive a Federal Loan Consolidation Disclosure Statement and Repayment Schedule from the provider of your new Consolidation loan. Thirty days from the date your loan is funded, you have to begin repayment according to that schedule.

 

Can I Switch Repayment Plans?

Yes. Simply contact your provider to switch plans. No extra costs or penalties are required to switch plans. You can do so once a year.

Maximum Repayment Terms

Current federal regulations stipulate that the maximum length of the repayment term is calculated based on the sum of the loans being consolidated, and the unpaid balance on other student loans. Consolidation offers extended repayment periods from ten to thirty years, depending on your cumulative debt. Your consolidation lender will calculate the actual repayment term.

 

Once I Have Taken Out A Federal Consolidation Loan, Can I Add Any New Loans To It?

Yes. Eligible loans may be added to your Federal Consolidation loan within 6 months of the date that the consolidation loan was funded. To add a loan, contact the provider.

The Office of Financial Assistance suggests that you carefully review the federal loan consolidation program, and make a decision based on your individual need.

Federal Loan Consolidation FAQs – Part 1

Federal Loan Consolidation is accessible under the Federal Family Education Loan (FFEL) program which is approved by the federal government. Federal Loan Consolidation is aimed at helping individuals with high monthly student loan payments. With Federal Loan Consolidation, you can consolidate all or part of your outstanding education loans, even if your loans are presently held by more two or more lenders and different loan types. Federal Loan Consolidation creates a single, new loan with one monthly payment

The Best Time to Consolidate Your Federal Student Loans

While federal consolidation loans have no application deadlines, there are considerations to make when deciding on when to consolidate. To be eligible for a Federal Consolidation Loan under the Federal Family Education Loan program (FFEL), you must be in the grace period or already repaying each loan you decide to consolidate. Repayment includes loans that are in forbearance or deferment. Immediately the grace period or an approved period of deferment has ended on your federal student loans, the higher in-repayment interest rate will be used to calculate your weighted average fixed rate. So, your fixed interest rate for the Federal Consolidation Loan is higher if you consolidate after your grace period or approved deferment.

Is a Credit Check Done Before I am Approved for a Federal Consolidation Loan?

No credit check is needed to obtain a Federal Consolidation Loan. However, you must not have defaulted on a Federal Student Loan.

 

Eligibility for Federal Loan Consolidation

·         Auxiliary Loan to Assist Students (ALAS)

·         Federal Direct Loans

·         Federal Perkins Loans

·         Federal Insured Student Loan (FISL)

·         Federal PLUS Loans (if you are the borrower)

·         Federal Stafford Loans (subsidized and unsubsidized)

·         Federal Supplemental Loans for Students (SLS)

·         Loans for Disadvantaged Students (LDS)

·         National Direct Student Loans (NDSL)

·          

Non-Eligibility for Federal Loan Consolidation

Non-federal loans like private loans, school-based loans or family loans are not eligible for consolidation under the Federal Consolidation Loan program.

 

Private Loans

Private loan repayment options are available through private lenders sometimes, but they may not include the same benefits as the Federal Loan Consolidation program. To know more, contact your private loan lender.

Interest Rate Calculation

The fixed interest rate for your Federal Consolidation loan is computed based on the weighted average of the interest rates of your consolidated loans rounded up to the nearest 1/8th percent and capped at 8.25%. Students should contact their lenders for their current interest rate information.

 

Benefits of Federal Loan Consolidation

•         A single and lower monthly payment
•          Consolidate undergraduate and graduate federal loans
•          Convenience - easier to manage one loan versus loans with multiple lenders
•          Deferment and forbearance options
•          Easy on-line application process
•          Eligible for the federal interest deduction for education loans (assuming students meet the IRS income eligibility requirement)
•          Extended repayment periods
•          Lender repayment incentives
•          More disposable income each month due to a lower monthly payment
•          No pre-payment penalty
•          No loan fees

 Cons of Federal Loan Consolidation

A reduction in the monthly payment and an extension of repayment terms may up the total interest charged on the loan. If borrowers consolidate during the grace period, they will lose any grace period that would have remained had they not consolidated their loan. An increase in federal loan interest rates may increase consolidating low interest rate loans may increase overall repayment costs, and the borrower may be locked into a higher interest rate.

Private Student Loan Consolidation - What You Need to Know

Only a tiny fraction of college or university students graduate debt-free, either because of a full scholarship or wealthy parents who can afford to pay school fees. Majority do not have a choice than to borrow or take out student loans to support their education. Since most students are not qualified to receive central government financial aid to buttress their fees for higher education, "private student loans" are the easier solutions.


Student loan, like every other is a debt which has the interest. But how can the students pay back their student loans during an economic crisis? Well, the answer is consolidating all their private student loans into one to relieve the financial burden.


Is private student loan consolidation a good thing? Yes, because it is combining all previous student loans into one manageable loan thereby making it easier for the students to pay the debts. With consolidated loans, you don't need to pay multiple loans monthly. You only have a single loan to pay and this makes it less complex and troublesome.


One other reason private student loan consolidation appeal to people is that it can reduce your monthly payment and interest rate considerably. Also, it also students a fixed monthly interest that is usually lower than those previous loans, because interest rates these days of economic crises are decreasing. This can easily help you to reduce your monthly payments by half depending on the interest rates.


Typically, loan consolidation lengthens the repayment period, thus giving the students more time to pay their debts. This also helps students lower the monthly payment because of longer repayment term of their loans. This is very good thing so that the students will not feel pressured to make monthly payment on time.


Finally, consolidation loan operators offer students better offers. They may be able to receive no prepayment penalties, thereby making all payments in excess of scheduled payments go straight to the principal. This way, the consolidated loan can be paid off early without penalties.


Private student loan consolidation also has negative sides to it. For instance, if you decide to consolidate your loans and extend the repayment period, it leads to an "increases in general total amount paid" while lowering your monthly payments. 


Also, the interest rate of the consolidation loan is based on one's credit worthiness. Sometimes, it can attract higher interest charges than the previous loans and students might have to pay more fees (like 5 percent of the loan amount) for obtaining such loan consolidation from some lenders. Therefore you should consider all the pros and cons and shop for your student loan carefully.

How to Pick Student Loan Consolidations at the Lowest Rates

While student loan consolidation programs are quite easy to locate, finding the program that has the lowest rate may be more difficult. To be eligible for a consolidation loan you need to have outstanding loans unpaid. 

Present student loans may have high interest rates and may take years to pay up. This means you will lose a huge amount of money in interest over the years as well as the hidden fees in these contracts. Student loan consolidation programs have the potential to save the student a lot of money.

The federal government generally offers much better interest rates than the private loan concerns do. After locating a possible loan source you can easily use the free online calculators to determine the true value of the potential loan. With these calculators, you can easily see what the monthly payments will look like and how much the interest will be added to the loan over time.

Private banks also offer student loan consolidation. Their interest rate is called Prime Rate meaning you will end up with in a contract will a little higher than the federal. Sometimes, Prime Rate online can be a good idea when you are looking into student debt consolidation loans. A good starting point is to approach the bank that holds your checking account and asking them if they issue student loan consolidation. You can then ask about any discount they have for you (if you use their bank for your accounts, of course).

Many companies also specialize in consolidating private student loans. These are in the business of making a profit so be careful about any offers you get from them. Most of the time, they do not have your best interest at heart, only theirs. That does not necessarily mean they will not give you have a good deal, it just means you need to be prudent in your choice making.

If you have federal loans then the consolidation needs to be a federal consolidation program. If your student loans are private then you will need private student loan consolidation. You can research the interest rates currently being offered online by searching for 'student loan consolidation_ interest rates'. When you know what the going rates are then any offers for consolidation programs you get will be easy to distinguish as a good deal or not. Your primary goal is finding the best deal offered at the lowest rate of interest and a reasonable time for repayment. Low interest loans with a long tenure are a bad deal in the end.

When you now know the best loan deal for you, the rest is just a matter of shopping around to compare the terms of the loans. It is possible to find the company who will offer a no-cost consolidation for student loans. 

There are lots of free programs that offer different rates varying with the circumstances of each person who applies. Do not settle for any offer that is not less than what you are currently paying in interest. In the end, the main aim of loan consolidation is a combined payment that is easier to manage.