Student Loan Consolidation

Student Loan Consolidation - Get the Real Truth

2010-06-04T10:37:00.003-07:00

Student loan consolidation is a financial tool that could make it easier for you to repay your student debt. It combines all of your student loans into a single, fixed-rate loan with a longer repayment term and lower monthly payments. The major advantage of debt consolidation is that it frees up money that you may need for living and job-related expenses. However, you will pay more in interest fees over the extended term of the loan. But you can negate this by making larger monthly payments to shorten your repayment period once your financial situation has eased up, since there are generally no penalties for overpayment.

Loans that qualify for Federal student loan consolidation include Stafford loans delivered either through the direct loan program administered by school financial aid departments or given by private lenders through the Federal Family Education Loan (FFEL) program, Perkins loans for college students in exceptional financial need and loans from private lenders such as banks and credit unions, as well as PLUS loans taken out by parents on behalf of their children. Under a new law, however, Stafford loans will be consolidated under the direct loan program and all Federal student loans will be provided through financial aid offices starting July 2010.

You will qualify for Federal student loan consolidation once you have left school, graduated or your enrollment has fallen to less than half-time and have at least one direct or FFEL loan that is in repayment, deferment or default status. If you have defaulted or delinquent debt, you may also avail of debt consolidation provided that you make adequate arrangements with your lender for repayment. Interest rates for consolidated loans are determined using the weighted average of the rates of your loans, rounded off to the nearest one-eighth percent; interest rates, however, are capped at a maximum of 8.25% to 9% and are fixed for the entire term of the loan.

Before availing of student loan consolidation, you should keep in mind that you may lose any benefits you are entitled to under non-consolidated repayment plans, which include interest rate discounts for prompt regular payments, rebates on the principal and even some loan cancellation benefits. Instead of consolidation, you may also consider repayment plans including standard fixed repayment over the term of the loan, extended fixed repayment over a longer term, graduated repayment in which your monthly payments start out low then gradually increase over the term of the loan and income-based repayment in which fixed monthly payments are determined based on income and family size.

Federal Student Loan Consolidation - The Truth

2010-06-04T10:37:00.001-07:00

It has become increasingly more expensive to finance a college education, pushing graduates deeper into debt. Although the average graduate leaves school with $21,000 in debt, an increasing number of students leave school with more than $40,000 in loans, which they will have to struggle to repay for a decade or more. Even if you don't finish college for any reason, you still have to pay off your student loans. Assuming you have $21,000 in Stafford loans, you will pay around $241 a month to service your debt. If this amount is over 10% of your monthly income, then you may have trouble meeting your monthly payments and may benefit from Federal student loan consolidation.

Federal student loan consolidation will combine Stafford loans, PLUS loans and Perkins loans into one fixed-rate loan that will help lower your monthly payments since you will be repaying it over a longer period of time (from ten to thirty years). Using the above example, your monthly payments will go down to around $136 if your consolidation debt extends the repayment term to thirty years. If you consolidate several types of loans, the consolidated debt will be divided into subsidized and unsubsidized loans; however you will still be making one monthly payment. You can also lower your interest rate by 0.6% by consolidating your loans during the grace period before you have to begin repayment. Also note that Stafford and PLUS loans given before July 2006 have variable interest rates; consolidating will give you one fixed-rate loan.

On the other hand, with Federal student loan consolidation, you will end up spending more money to repay your debt. For example, for a ten-year, $21,000 loan, you will pay some $8,000 in interest; when you extend the term of the loan to thirty years, the total interest paid will be around $28,000. But you can address this concern by increasing your monthly payments, since there are no overpayment penalties for consolidation loans.

However, Federal student loan consolidation allows you a wide variety of repayment plans, including a graduated repayment plan that increases your monthly payments every two years, an income contingent plan that pegs monthly payments to factors such as annual income, family size and direct loan balance and an income-based repayment (IBR) plan for borrowers that are experiencing partial financial hardship. If you qualify for an IBR plan, your payments may not be enough to repay the entire amount over the term of the loan; if this is the case, the remaining unpaid amount will be condoned. However, if you opt for IBR you can no longer shift to other repayment plans other than standard repayments.

Private Student Loan Consolidation - The Truth If Federal student aid is not enough to meet your educational expenses, then you can avail of colle

2010-06-04T10:36:00.000-07:00

If Federal student aid is not enough to meet your educational expenses, then you can avail of college loans from a private lender. Private loans can also help medical, dental and legal students meet post-graduation expenses, such as the cost of finding a residency or reviewing for the bar, since these are not eligible for Federal aid programs. The advantage of private loans is that you can apply at any time, there are no eligibility requirements as long as you are creditworthy and you don't have to begin repayments until after graduation.

And once you've started repayments, you can take advantage of private loan consolidation programs. Loan consolidation combines all your private college loans into one fixed-rate loan with lower monthly payments, freeing up money that you might need for daily living or job-related expenses. With a consolidated loan, you may end up reducing your monthly payments by as much as eighty percent. However, you cannot consolidate Federal student loans along with private loans.

Other advantages of private student loan consolidation include a longer repayment term (of up to 25 to 30 years), reduced interest rates for borrowers with improved credit scores, deferments on monthly payments of 36 months for military men in active service and 48 months for medical and dental graduates taking up their residencies, and no penalties for over payments, meaning payments in excess of the required minimum go towards repayment of the principal of the loan. Consolidating your loan may also help improve your credit score since it cuts down on the number of open credit accounts that you have.

However, expect interest rates for private student loan consolidation to be higher than those from Federal loan consolidation. Interest for private student loans is based on LIBOR or prime rates, unlike Federal Stafford loans are fixed at 6%-6.5 percent. Also note that some lenders charge fees which could wipe out gains from low interest rates. Try and pick a loan with no fees, even if it charges slightly higher interest rates.

To qualify for a consolidation loan, you should owe at least $5,000 in student loans but no more than $250,000. When applying for private student loan consolidation, it is highly recommended that you apply with a qualified co-signer, as this will increase the chances of your loan being approved and might even qualify you for a lower interest rate. Choose a loan whose interest rates are based on the LIBOR, since it will be less expensive in the long-run. You also need to continue servicing your loans while the consolidation is being processed in order to maintain your creditworthiness.

Loan Consolidation - An Effective Way to Manage Debt

2010-06-04T10:35:00.002-07:00

Loan consolidation services were introduced in the United States to help people burdened by debts: credit cards, home loans, car loans, departmental bills, utility bills, medical loans, student loans and other such outstanding liabilities. Keeping a track of many different monthly payments is not an easy job. Statistics reveal that an average American spends more time focusing on what payment to make, rather than planning how he can manage his finances better. Credit consolidation service can help here.

Benefits Of Using A Loan Consolidation Service

A consolidation debt program has the following benefits.

*Consolidation of all the miscellaneous debts and loans into one single aggregate payment per month.

*Reduces the possibility of a missed installment, and allows the borrower to focus on improving the state of his finances.

*Loan consolidation firms act as agents on behalf of the borrower. They re-negotiate the payment plans with the lenders and credit card companies, and sometimes even work out lower interest rates or smaller monthly payments for the clients.

*Such a credit consolidation service not only provides one debt relief, but also gives professional guidance to the borrowers on how to manage their funds more effectively in future.

*It puts an end to dozens of harassing and stressful collection calls from various different lenders, since there is only one lender left to deal with.

*People with bad credit ratings also get one more benefit by consolidating their loans. The fact that they have taken a step forward in setting their financial affairs in order, shows them in positive light before the credit rating agencies, and helps them earn several points in favor while ascertaining their new credit scores.

Who All Can Benefit From Such A Program?

Anybody who has several outstanding loans on his balance sheet can use a loan consolidation program. It doesn't matter whether those are outstanding credit card bills, medical loans, a home loan or car loan. Even students can use the advantages of a student loan consolidation program, if they have more than one student loan. Further, if a person has any departmental store card or utility dues, they can be clubbed in such an aggregate loan. A debtor whose account has been handed over to any collection agency can also use the services of such a program.

There are several firms that provide debt consolidation services online. A person can easily use their free online debt calculator to compare rates and net savings. However, people should first ensure that such sites use proper data encryption features before they enter any financial information, to avoid becoming a victim of phishing. Secondly, any genuine loan consolidation program will work in tandem with a customized financial management program, so a debtor can enjoy debt relief for a longer time.

Best Student Loan Consolidation Interest Rate Online

2010-06-04T10:35:00.001-07:00

Student loan consolidation interest rates are subject to various changes. It is possible for a loan to incur two different interest rates in the loan term, in that one rate is calculated during the students time in school and the other kicks in once the student graduates.

Consolidation loans have longer terms than other loans.

Students can choose terms of 10-30 years. Even if the monthly payments are lower, the sum amount paid over the loan term is higher comp aired to other loans.

Fixed interest rate is calculated as the average of the interest of the loans being consolidated, assigning relative amounts borrowed, rounded up. Some loan policy features such as the grace period for re payment are lost and do not reflect on the consolidation loan.

These make them not suitable for all borrowers.Student loan consolidation interest rates is tied to one or more financial indexes.

For instance students with good credit scores or from families with good credit history get loans at cheaper interest rates and smaller origination fee.money paid out in terms of interest is now tax deductible.

This is a fact tat most lenders omit to tell potential clients so as to avoid comparison with other lenders in the market.

In some cases lenders give rates which are very low but fail to tell the borrowers that the rates only apply to those people with good credit scores thus they find themselves paying up to six percent more, than the advertised amount nine percent higher loan fees and two thirds lower loan limits.

Student loan consolidation interest rates also varies depending on the type of loan applied for.

They are two major types namely school channel loans and direct to consumer private loans. the school channel loans are certified by the school thus offer lower interest rates however they take a longer period to process and are directly disbursed to the school on the other hand direct to consumer private loans carry higher interest rates but are accessed very quickly.

The argument behind this is that the convenience is offset by the risk of student over borrowing or misuse of funds.

Student loan consolidation interest is also determined by the buying factors, such as the perceived risk of lending to the individual as well as the financial indexes they are attached to such as stocks and money markets current trading trends.

Loan Deferment - How to Skip Loan Payments Without Destroying Credit

2010-06-04T10:34:00.001-07:00

Loan deferment is a special financing alternative that lets borrowers skip a payment without receiving derogatory credit reporting. The option to defer payments is available for most types of loans including mortgage, auto, credit cards, and student loans. Debtors must obtain lender approval and abide by deferment policies.

The loan deferment process involves contacting the lender, submitting a deferment application, and undergoing the application process. The actual process can vary by lender. Other factors taken into account include the borrower's credit history, type of loan, and number of payments being deferred. Approval can take less than 24 hours to several weeks.

Borrowers should create a folder to store loan document records, along with a record of phone and email correspondence. Always keep track of phone conversations by writing down a summary of the call, date, time, and name of the bank representative spoken with. When important documents are mailed, invest in the extra protection of tracking receipts. Certified letters should be sent with a return receipt request in case it is necessary to provide evidence the documents were received.

Deferred payments are usually placed at the end of the loan and payment terms extended. The type of loan is a contributing factor as to how many payments can be skipped. On average, lenders allow borrowers two to three months to resolve financial setbacks.

Lenders may require borrowers to submit a financial letter of hardship which explains the circumstances causing them to require a loan deferment. Hardship letters are usually required with federal student loans and real estate transactions such as loan modifications.

Students attending college at least half-time can apply for in-school deferment. This option is sometimes available to post graduates who have entered into college loan consolidation. In-school deferment is only available to students enrolled in or graduated from accredited schools and cannot be used for online education tuition.

It is important to note that some banks do report deferred payments as delinquent. Therefore, it is crucial to ask lenders how they report to credit bureaus before entering into a contract. Payments reported as past due can reduce FICO scores. Depending on credit scores, a reduction of ten points can place debtors in a lower credit category; making it difficult to obtain credit in the future.

It is best to obtain a real estate forbearance agreement when deferring mortgage payments. Forbearance agreements prohibit lenders from commencing with foreclosure action unless borrowers' default on the contract. This is of particular importance when obtaining mortgage deferment to prevent foreclosure.

Always obtain loan agreements in writing and read the fine print. One of the biggest mistakes borrowers make is entering into verbal agreements. If things go wrong there is no evidence to prove the case. Debtors should know the number of deferred payments, payment schedule, fees or penalties, and how the lender reports suspended payments to credit bureaus.

Loan deferment can help borrowers get back on their feet, but can sometimes include credit blemishes. Take time to understand the advantages and disadvantages; obtain the contract in writing; and adhere to the terms to ensure a successful outcome.

Student Loan Consolidation - Better Rates and Terms Are Within Short Reach Higher education has great benefits: higher income, advantage in the job m

2010-06-04T10:33:00.000-07:00

Higher education has great benefits: higher income, advantage in the job market, and sense of security. However, such benefits are often spoiled by financial obligations from college years - student loans. After graduation, many are surprised by the amount of money they have to commit to paying off their student loans. This is especially an issue for graduate students in expensive fields: engineering, law, and medicine. Such students find themselves in the position of making several payments disbursed to private and government-funded loans. For many, even making minimum payments is a struggle every month they come due. The good news is that there are a number of student debt consolidation programs available that may help convert multiple loan payments into one, being easier to afford. Sometimes student loan consolidation is the only step to avoid slipping on payments and getting behind on college debts.

Important Things to Consider

There are several federal laws in place that regulate student loan consolidation. It is important to be aware of the guidelines they impose to protect your rights. If you are looking to get lower monthly payments on your student loans, you may achieve it by taking advantage of extending your loan terms and/or reducing your interest rates.

Federal laws allow up to 30 years for student loan consolidation programs. By extending your loan duration, you may be able to reduce the amount you pay each month significantly. It is important to consider that the longer your loan terms are the more you would end up paying in interest charges over the life of the loan. If are looking to lower your monthly payments then the time frame of your loan is mostly likely going to get extended. Therefore, while prolonging your repayment period may be of great help, it is more important to focus on interest rate reduction.

You may reduce the interest rate on your student loans in several ways. First, you may try to consolidate your student debt through a non-profit lender. Since they do not focus on extracting profits from their activities and have lower operating costs, your rate reduction may be quite significant. Another effective way is to try to take advantage of recent legislative changes that allow for discounted rates available with student debt consolidation programs. While such programs often have criteria to meet, such as showing significant financial need, they may well suit your case. Having your payments processed by automatic bank debits is another effective way to qualify for rate discounts, as most lenders offer permanent rate reduction for borrowers who opt for ACH payments.

Student Loan Consolidation Myths Busted

There are a number of misconceptions about student loan consolidation. Many people are under impression that the rates may fluctuate throughout the life of a loan. This is not true at all, as lenders are required by federal laws to give fixed rates on consolidation loans. Another common myth is that student loan consolidation ruins your credit. Financial institutions do not run credit reports for student debt consolidation. In addition, unlike some other loans, student lenders are not allowed to charge pre-payment penalties, allowing you to pay off your loan sooner and benefit from lesser interest charges.

Beware of lenders that tell you that only they are able to deliver special benefits to you, as it is not true. Student loan consolidation is an industry strictly regulated and monitored by U.S. Government, ensuring equal and fair treatment to all borrowers who face financial problems.

Student Loan Consolidation

2010-02-13T10:04:00.000-08:00

When interest rates on student loans rise up, many college students begin to consider student loan consolidation. There are both benefits and disadvantages to student loan consolidation. This article explains the pros and cons of consolidating student loans.

Pros

Consolidating your student loans locks you in at the current interest rate. This means that, if interest rates rise up, you will continue to be responsible only for your original fixed interest rate. Unconsolidated student loans have variable interest rates that fluctuate from year to year.

Consolidation loans generally have longer repayment periods. Unconsolidated student loans have a maximum repayment period of 10 years. Consolidation loans may have repayment periods up to 30 years. This means that monthly payments may be lower on consolidated loans.

Cons

On unconsolidated student loans, the government pays the interest on your loans for six months after you graduate. This means that you wouldn't be responsible for a payment during this time. However, consolidating your student loans forfeits this grace period. You will be responsible for payments on your loans immediately after graduation.

If you consolidate, you are locked in at the current rate for the lifetime of the loan. If you don't consolidate, your interest rate will fluctuate depending on economical conditions. It is possible that interest rates will drop lower than the current rate in the future.

If you consolidate under a longer repayment period and make only the minimum monthly payments, you will pay more interest than you would on in a shorter repayment plan. This could cost you thousands of dollars over the lifetime of the loan.

How to Determine if Student Loan Consolidation Companies Are in Your Best Interest

2010-02-13T09:56:00.000-08:00

When you start dealing with student loan consolidation companies you are going to find that there are a great many people that are willing to help you, work with you, and figure it out with you. There are more student loans that are outstanding at this time than any other time in history. This is an obvious effect of the economic situation that wasn't so obvious four to six years ago.

Now, with the apparent difficulties that recent graduates are noticing when it comes to paying their student loans back, many have no choice but to investigate student loan consolidation companies or default on the loan.

The good news is that loan consolidation plans can be highly beneficial when it comes to developing a monthly payment arrangement that you can actually afford. For many people, the consolidation companies are the only ticket to managing all of their numerous and varied financial responsibilities.

A student loan isn't like a car loan. Most loans are deferred until after you graduate or spend at least six months out of school. When you enter into a agreement it is nearly impossible to tell what kind of financial situation you are going to be facing. Your agreement is at best, a hopeful guess at how well you'll be doing.

Because if this interesting twist, you end up with two choices. You can either stat enrolled in school indefinitely or you can employ the services of a student loan consolidation company. Either way, it is unlikely that you are in the position to pay off the loan as initially planned.

One of the most important aspects of getting out from under the situation is clear and simple. How much longer will you be paying on the loan and what does this do to your credit? In some cases, you won't be paying on the loan that much longer. The idea of consolidation is to lower your monthly payment by combining the payments and lowering the overall interest. However, in order to drop the payment, sometimes the terms of the loans are spread out for a longer period of time.

Additionally, agreeing to an arrangement can and most likely will have an impact on your credit. You just have to weigh that impact with the potential impact you would see if you were unable to make any more payments on your loans. This is a situation that only you can really determine what is best. Overall, the student loan consolidation companies can do their best to answer your questions while giving you the information that you need in order to make the best financial decision possible.

How to Get the Best Student Loan Consolidation Rates

2010-02-13T08:27:00.000-08:00

It is very common in today times to find that you are graduating from college with a number of student loan debts. When you start looking at all of your loans, the repayment terms, and the interest rates; it can quickly become overwhelming. However by looking at student loan consolidation rates you might be able to save money and reduce the number of payments that you make on a regular basis. When you consolidate your loans you will find that you have better interest rates, better terms and one simple payment to make each month. Plus most student loan consolidation companies actually help you with being able to find the best options for you including repayment terms that fit into your budget.

By being able to find great student loan consolidation rates you will be able to reduce any feelings of anxiety that you might have over the process. This lower interest rate will help you to be able to have more affordable payments. Plus you will save money in checking as you only have to write one check each month rather than sending multiple checks out for multiple payments.

There are many helpful pointers that you should follow when trying to get the best student loan consolidation rates. One of these is that you should make sure that you are not choosing the first company that you talk to without looking at the options given by other companies. This is one area where comparison shopping could save you a ton of money over the terms of your loan. You will want to make sure that you choose a company that has payments that fit into your budget and are at a reasonable monthly rate. Student loan consolidation companies are supposed to help you by offering lower payments, lower interest rates and a bunch of other benefits. Plus these companies do not typically ask for any additional fees so you might want to question things if you are being asked to pay any additional fees.

Also when you are looking at these loans, the lenders might push to get you to sign the loan right away. You will want to hold out for as long as you possibly can as this could increase the money that you are saving and might even help you to get lower interest rates. In many cases the lender will insist that you sign papers immediately. You will want to keep your options open as you check with many different lenders and find out what is available for you on the market. Plus you will need time to read all of the terms and conditions and to think things over prior to signing the loan. If you were promised things that are not in writing you will need to make sure that they are in writing in the loan as there is nothing legally binding about unwritten promises. Make sure that you only sign a loan if all of the information is correct.