5 Benefits of Student Loan Consolidation

Concept of Student Loan Consolidation

In order to get away with the hassles of student loan repayment liability it is important to plan for it. Existing repayment liability may not have beneficial terms, hence it is important to consolidate loans for their manageability and easy repayment options. Following are the benefits of Private Student Loan Consolidation.

Benefits of Student Loan Consolidation

• Single Reduced Monthly Liability: Consolidation removes the hassles of handling a number of loans and meeting their various repayment deadlines by combining them into a single loan liability. Single loan liability is easy to manage and clarifies the commitment to the student. These loans are offered at a comparatively lower rate of interest and flexible repayment period reducing the monthly liability.
• Lower Interest Rates and their consequent reductions: Consolidation loans generally carry a lower interest rate in comparison with regular student loans. These loans aim at providing a beneficial repayment scheme to the student borrower. Further reduction in rates are offered to those borrowers who have a satisfactory credit score, who make on time repayments, provide auto debit payment option and a joint loan application with a credit worthy cosigner. Lock in concept helps you get minimal rates helping you save considerable money.
• Flexible Repayment Option: As repayment can spread over a longer period of time, your monthly liability will be low providing extra cash. Repayment period can be extended upto a maximum of 30 years. Deferment and Forbearance option offers flexibility in times of financial crisis and helps you in maintain your credit score.
• No Prepayment Penalties: Loans can be repaid much before time not suffering any prepayment penalty. Benefit of student loan consolidation is that you can pay more if you intend to pay it fast.
• Improved Credit Score: Your credit score improves mainly because consolidation helps in immediately settling a list of loans in full. Further, the new liability carries lower interest rate and monthly installment depending on your repayment ability, hence it becomes easily achievable.

How to Choose the Best Student Loan Consolidation Program?

Student loan consolidation is a specialist field, which is why you should entrust a professional consolidator (i.e., a service agent) to consolidate your student loans. Given the large number of consolidation programs active in the United States, to choose the best student loan consolidation program can sometimes be difficult. (Note: The term ‘student loan’ appearing in the rest of this article refers to federal student loans only).

Student loans in the United States are generally understood to be federal student loans, unless specified as ‘private’ student loans. Federal student loans are student loans whose repayment is guaranteed by the US federal government. The philosophy behind student loans is that monetary problems must not come in the way of education, and that such problems are best left to the time the student enters the job market and starts earning.

Student loan consolidation is the bringing together of all student loans taken by a person into a single loan account with a single monthly repayment at a lower interest rate than applicable on a loan-by-loan basis. Your right of choice: If all the student loans you want to consolidate were taken from the same lender, you have no choice but to first approach the same lender for consolidation of your outstanding student loans. This is the law. However, if your lender refuses to consolidate your loan for any reason, then – and only then – are you allowed to approach a different lender for the consolidation of your student loan.

No competition on interest rates: Let it be clear that lenders are not allowed by law to compete with each other on the basic interest rate front. According to the Federal Family Education Loan Program (FFELP) guidelines, lenders are allowed to calculate your basic interest rate on the basis of the weighted average of the interest rates on your existing loans.

Which student loan consolidation program to choose.

Therefore, there is nothing like one lender offering you a lower basic rate than another. Does this mean you should go in for any student loan consolidation program? No. Consolidators vary in terms of knowledge, rate reduction plans, and the quality of their service.

• Knowledge: Student loan consolidation plans can change with time. A good consolidator therefore is one who is up-to-date with knowledge on the prevailing rules and regulations. For example, there are provisions for loan forgiveness. Do you qualify for forgiveness? You can benefit if you consolidate when still in school or in the six-month grace period immediately following graduation. Has your consolidator informed you about it? These are examples of the importance of knowledge in selecting a student loan consolidator
• Rate reduction plans: Many lenders have some very helpful rate reduction plans. Does you consolidator offer you any information on this? Rate reduction happens in one of the following two situations:

a. Timely payments for several months: If you have a record of on-time payments for several months, you get a rate discount. (The exact number of months will vary from lender to lender – that’s where the consolidator becomes useful by informing you of these different schemes by different lenders).

b. Automated payments from your bank account: If you allow automated payments directly from your bank account towards your monthly repayment of your consolidated student loan, some lenders offer a discount on the basic rate. Some will make the discount applicable after a certain number of installments have been paid, though most will give you a rate after factoring in the discount.

• Service quality: You have a right to efficient and courteous service from your student loan consolidator. As long as you are consolidating federal student loans, your credit history is none of anybody’s business; so you don’t need top answer any questions about it. Your consolidator should show interest in your consolidation case, be polite and, most importantly, be prompt in submitting your application for consolidation. Remember, you have to keep paying separately for each of your student loans until they are formally consolidated, which usually takes up to 60 days. So, a consolidator who is not quick is bad for you.

Student Loan Consolidators :

Student loan consolidators approved by the federal government do not compete on the basic interest rate on your consolidated student loan. However, they do compete on discounts subject to terms and conditions pertaining mainly to your repayment record. It is therefore necessary that you select a consolidator who knows the different rate discount offers of different lenders and offers you the consolidation plan best for you.

There are also other areas of knowledge – such as conditions for loan forgiveness or grace period benefits – with which your consolidator should be thorough. Therefore, you should talk to at least three consolidators, testing them on the lines suggested above, and select the most knowledgeable, hence most useful, to you.

Student Loan Scams: Types, Effects, and Precautions

Student loan consolidation is a step ahead, namely, the citizen should be carry a less a repayment burden as feasible when he or she has completed education and is earning. The concept of student loans is founded on the principle that education is too high a national need to be compromised at the altar of financial constraints.

Despite these high principles and their practice, there are – as always – unscrupulous people around who are out to make quick bucks at someone else’s expense. Not surprisingly, student loan scams abound in the United States. This article looks at the forms of student loan scams and their effects on the victims. It later also looks at one cardinal precaution you should take when the time for student loan consolidation comes.

STUDENT LOAN SCAM TYPES:

Though cheats are an innovative type of people in the sense that they innovate newer ways to cheat, there are basically two typical forms of student loan scams in the United States as of now. They are impersonation, and bribery.

• Impersonation: Here, a genuine student’s identity details are stolen by a crook. This crook then uses the stolen identity to apply for, and obtain, big amounts of student loans. Since repayment against student loans starts after the completion of the study, this crime is not immediately detected and the crook has ample time to work out a hiding strategy.
• Bribery: Here, the college or university (or one or more employees) are in a cahoots with a student loan lender. The former agrees to persuade its students to choose that particular lender. In return, the lender gratifies the institution, or its employee/s concerned, with cash or articles of value. The student is the loser because he gets to choose only from the limited variety of loans offered by the particular lender.

EFFECTS OF STUDENT LOAN SCAMS ON STUDENTS:

If a student is a victim of the impersonation type of scam, he or she will be left with the responsibility of having to repay a loan he or she never took. This can be quite a big burden. Refusal to pay will give the victim a bad credit history which will drastically reduce his or her creditworthiness in the market. Of course, the victim can seek redress in the court of law, but it will be very difficult to prove that a fraud has been committed. This is even more so because of the time gap between the commitment of the crime and its discovery by the victim. In extreme cases, the victim may be barred from attending any form of further education.

Use of Consolidators to Reduce Loan Scams

Student loan consolidation, being a specialist activity, is usually (and should) be done through agents, who are called ‘consolidators’. The consolidators are not lenders; they are intermediaries between the lender and the borrower.

Consolidators usually act on a commission basis with the commission paid by the lender. The scope for scam in consolidation lies in the offer the consolidator makes. Some lenders may give a higher commission for a particular consolidation package; so the lender will try to push that particular package even though better packages are available to the student if he scours the market.

Protect Yourself from Student Loan Scams

Protect Yourself from Student Loan Scams

1. To protect yourself from the impersonation type of student loan scam, just do not divulge your critical identity details to anyone.
2. For protection against the bribery type of scam, never go for the first lender who offers you a student loan.
3. Always ask for offers from three or more consolidators and take the best. Always treat with suspicion any specific lender recommended by the institution in which you are pursuing your education.
4. The same precaution of seeking and comparing three or more offers will also give you reasonable safety from student loan consolidation scams.
5. Finally, don’t show desperation for getting a student loan, or consolidation, because desperate people are easy prey to crooks. Even if you are really desperate, don’t show it.

How to Deal with Student Loan Consolidation Scams

Crooks exist in every society. They are an ingenuous community by way of devising newer ways to cheat people. Student loans and student loan consolidation offer scope to crooks to cheat on unsuspecting students. Impersonation and bribery are the two typical forms of student loan scams. However, you can protect yourself from such scams to a considerable extent if you exercise due diligence and do not jump for the first lender or consolidator you meet. If you are desperate, don’t show it because desperate people are soft targets for crooks.

Student loan consolidation info that you must know

Student loan consolidation info is that which helps you understand the concept of the loan. It is the combination of two or more student loans into one loan with one monthly repayment, which is usually lower than the sum-total of repayments that would have to be made if the loans were not consolidated.

Federal student loans are easier to be consolidated because they are backed by federal government guarantee. Private student loans can also be consolidated though it would involve investigation into the applicant’s credit history and creditworthiness. Regardless of whether your student loan is federal or private, consolidation is a very good option that you must avail of.

Know and understand the following student loan consolidation info:

1. Are you eligible for loan forgiveness? The benefit of forgiveness is extended if one or more of the following are applicable to you:

• Engaged in volunteer work: Service with AmeriCorps for a period of 12 months fetches you USD 7,400 in stipends and USD 4,725 towards loan pay-off. These figures may change from time to time; so it’s advisable to check it out on 1-800-942-2677. If you are volunteering with Service to America (VISTA), you can earn up to USD 4,725 toward loan payoff. Call 1-800-942-2677 or 1-202-606-5000.
• Military service: You are entitled to a debt clearing allowance of USD 10,000 if you are a member of the US armed forces.
• Teaching in specified communities: If you are, or intend to be, a teacher, do look at the list of loan forgiveness programs maintained by the American Federation of Teachers. Your local school board will also tell you of the specific schools where teachers become eligible qualify for loan forgiveness. Generally, the schools where teachers enjoy loan forgiveness are those that serve in public interest and where salaries are lower than in the regular education market.
• Engaged in clinical medical research: If you are a healthcare professional engaged in clinical medical research, you are probably eligible for the US National Institutes of Health's NIH Loan Repayment Programs that repay up to USD 35,000 a year of student loan debt.
• Legal practice in specified communities: If you are a lawyer, call Equal Justice Works on telephone 1-202-466-3686 or fax 1-202-429-9766 to know whether the community you serve entitles you to loan forgiveness programs.

2. Once you know your eligibility for loan forgiveness, you can calculate the balance loan that you need to repay. If the balance is still considerable, you must opt for consolidation.

3. Federal student loans are easy to consolidate because they are guaranteed by the federal government. Credit history or creditworthiness are minor issues here because of the federal guarantee.

4. Federal student loans cannot be clubbed with other types of loans, federal or private, for the purpose of student loan consolidation.

5. Private student loans can be combined with other loans such as credit cards, mortgage, car, and so on, but at the discretion of the lender/consolidator.

6. Federal loan consolidation takes around two months. Private loans can be consolidated quicker, but your credit history and creditworthiness will be important criteria.

7. Applying for consolidation does not mean that consolidation has been done. So, don’t stop paying your monthly repayments on each loan until you are notified of their consolidation.

8. You don’t need to pay for federal student loan consolidation. Whether you have to pay, or not, for private student loan consolidation, depends on your agreement with the consolidator.

9. Consolidation should result in a substantial saving. Conclusion: Finally, remember that student loan consolidation is a specialist business. Don’t entrust yourself for completion of all formalities. Find a few established loan consolidators from the Internet. Apply to at least three consolidators, and compare their offers. Go for the best.

Basic Student Loan Reconsolidation Rules

There are some basic rules of student loan reconsolidation that have to be followed regardless of the type of reconsolidation being chosen. Student loan reconsolidation is the aggregation of several student loans into a single loan with a single monthly repayment.

Consolidation works out to a considerably reduced monthly payment compared to the sum of repayments against each loan.

Both, federal and private student loans can be consolidated though the rules governing the two types vary widely. In brief, federal student loans can be consolidated quite easily if the person concerned has a neat credit history. Consolidation of private loans involves more rigorous investigation into credit history and current credit profile. If you have taken more than one student loan, there’s no reason for you not to consider reconsolidation.

You should however keep in mind certain basic rules of consolidation as you go about the consolidation process. These rules include:

• Typically, you should have outstanding student loans totaling a minimum of USD 7,500 though you will find many more takers for your consolidation if your outstanding is USD 10,000 or more.
• No fee is charged for student loan consolidation.
• If you want to consolidate several student loans taken from a single private lender (instead of the federal government or the direct loan program), you must give that lender the first right of refusal to consolidate your loans before you start looking for other lenders.
• If you want to consolidate several student loans taken from different private lenders, you are under no obligation to consolidate with any of them and can seek a different lender for your loan consolidation.
• You can consolidate when still in school, or during the six-month grace period immediately after graduation, or when you are already making your repayments on your unconsolidated loans.
• Federal student loan consolidation can lead to interest rates as low as 5-7 per cent.
• Interest rates are lower when you are still a student or during your grace period.
• Rates on Stafford loans and PLUS (Parent Loan for Undergraduate Students) can change on 1st July every year. Though rates have increased in the recent years, the law has specified a maximum rate of 8.25 per cent for Stafford loans and 9 per cent for PLUS loans.
• You are entitled to loan forgiveness if you work in the US military, or teach, practice law or medicine in specified communities.
• You can consolidate federal student loans only once. Reconsolidation of private student loans however is at the discretion of the lender because private loans are technically regular market loans.
• The onus of finding a lender willing to consolidate your student loans is on the student itself. This, being a professional task, is best handed to a specialist student loan consolidator (i.e., an agent).
• There are prepayment penalties on consolidated student loans; so you can pay more than the minimum monthly installment to clear off your debt faster. If you do so, you must write the words ‘principal payment’ on the memo line of your check.
• Some lenders reduce interest rates on consolidated student loan repayments if you build a record on 36 months of timely payments. Do check out with your consolidator if the lender they are associated with provide this benefit.
• Federal student loans cannot be clubbed with other types of debts (such as credit card outstanding, car loans, and so on); private student loans can.

The above are only some of the basic rules you should keep in mind while initiating the student loan consolidation process. There are many more rules and sub-rules; these can appear complicated to the uninitiated. It is therefore best to seek a reputed student loan consolidator to consolidate your outstanding student loans. Knowledge of the basic rules outlined in this report will help you negotiate with your prospective consolidators.

What Are Student Loan Consolidation Loans?

NO, there is no typing error here. The term Student Loan Consolidation Loans, howsoever unwieldy, is correct. We shall refer to it as SLCL in this article, which will attempt to demystify the term. Student loans: Student loans, as is common knowledge, are loans taken by students to finance their own education. Parents may also be given such loans for their student-children, and such loans are called ‘Parent Loan for Undergraduate Students’ (PLUS).

These are usually low-interest loans whose repayment has to start when the student starts earning. Student loans are of two types: federal, and private. Federal student loans are underwritten by the federal government. This means that if the borrower fails to repay the lender, the federal government will pay the lender and then collect the money from the student loan taker.

Nearly two-thirds of students in the United States have some debt and, on an average, federal student loans amount to around USD 20,000 per student. Student loan consolidation: Having understood student loan, let us look at what is student loan consolidation. It usually happens a student takes more than one loan in the course of his or her student life.

By the time the student has completed education and started earning, there is a burden of loans to be repaid. These repayments add up to quite a heavy sum every month. To help the debtor cope with debt repayment obligations, his or her outstanding student loans are coalesced into a single loan entailing a lower monthly repayment.

The ex-student thus has more disposable cash to attend to the other needs of life while simultaneously fulfilling student loan repayment obligations. This coalescing of two or more student loans is called ‘student loan consolidation’. SLCL: Now, let’s look at what SLCL – whose expanded name is the unwieldy phrase with which we started – is all about.

How to Calculate your Student Loan Consolidation Amount

Consider that you have three outstanding student loans of USD 10,000 each taken from three lenders. A different lender pays your outstanding to each of your creditors. So, this new lender pays out USD 30,000 to the three lenders who lent you your different student loans. This new lender thus takes up the sum-total of your loan. So, instead of having three creditors to whom you owe USD 10,000 each, you now have only one creditor to whom you owe USD 30,000.

This consolidation of your three outstanding loans of USD 10,000 each has been possible because you have effectively got a fresh loan of USD 30,000 which has directly been paid to your three original lenders so that your loan account them is closed. This fresh loan of USD 30,000 is called SLCL. Simple? Ok. The above example is kept simple to facilitate understanding. The lender extending the SLCL need not be an altogether different entity. It can be one of the three original lenders to you. If all your three loans were from the same lender, then this same lender could also extend you a SLCL.

Philosophy of the basis of the consolidation loans:

While the social philosophy behind SLCL is to minimize the impact of student loan repayments on the borrower’s post-student life , what commercial sense does it make to the SLCL-giver since he is going to charge you a lower interest rate than what it paid out to your original lenders? Well, the answer lies in: volume.

A larger loan, over a period of time, fetches a higher gross income for the SLCL-giver than what it paid out to your original lenders even though it amounts to a lower percentage rate of interest for you. Thus, Student Loan Consolidation Loans makes perfect social sense and perfect commercial sense.

Student Loan Consolidation Companies in the United States

Student loan consolidation a specialist business and yet, there are many student loan consolidation companies in the United States. It is therefore a hazardous task to identify the ‘best’ among them.

Nevertheless, this writer takes the risk of identifying three favorite online consolidators without in any way being dismissive of their competitors. However, before we look at three specific firms, let us look at some general guidelines for identifying the best student loan consolidators.

General guidelines of identifying good student loan consolidation companies:

• The best student loan companies don’t just consolidate. Rather, they provide added benefits such as consolidation during the grace period for recently-emerged graduates.
• They offer more than one repayment option. In the case of private student loans particularly, they offer a variety of permutations and combinations with other categories of loans since private loans are not governed by federal rules.
• It is also important to ensure that the consolidator you select is active in the wider financial market by way of consolidation of various types of debts. This wider engagement is important because it suggests they are aware of the bigger market dynamics; hence have wide knowledge of different options and interest rates possible.

Three selected consolidation companies: We briefly review three consolidators selected by this writer on the basis of interviews with people who have had their student loans consolidated and through an internet search. The research conducted was not comprehensive. The three firms selected by this writer are as follows:

Loan Approval Direct: This firm can consolidate student loans totaling as high as USD 125,000. In many cases, this firm has managed to reduce monthly installment by up to 60 per cent and bring interest rate down to 3 per cent. Loan Approval Direct consolidates both federal and private student loans though on different terms.

Next Student : This firm is recommended for first-time consolidation of student loans, both federal and private It is worth contacting this firm if you are out of school or if you are graduate within the next six months and if your loans are over USD15,000 without any default. Next Student has succeeded in reducing repayment installments by up to 60 per cent in many cases.

Credit.com : This firm provides free consolidation services with four repayment options. Candidates for consolidation should owe at least USD7,500 in federal student debt. Processing of applications is said to be quick with this firm. Visit this website and fill in the online application form to check out you eligibility for student loan consolidation.

Finally, as said above, the three firms named in this report enjoy a good reputation in the market of student loan consolidation though there surely are others in the market that are as good or even better. Whichever firm you select, the content of this report can serve as a benchmark to what constitutes a good student loan consolidation company.

What are Student Loans and Student Loan Consolidation?

Student loans are loans given by banks and certain financial institutions in the United States (as well as in some other countries) to finance the education of students at all levels of their academic and training career.

A student may take student loans at different stages of his or her education. The loans may come from the same or different lenders. Student loans are to be repaid after the student has completed his or education and starts earning.

Types of Student Loans:

In the United States, student loans are broadly of two types: federal and private.

Federal: Federal student loans are those whose repayment is guaranteed by the federal government. If a federal student defaults on loan repayment, the government steps in and fulfills the student’s repayment obligation towards the lender. Given this guarantee, banks and financial institutions are more liberal with extending federal loans.

Private: Private student loans are loans extended by lenders at their own risk. Of course, students who avail of such loans are legally obliged to repay on pre-set terms and conditions. But, in case they default, the lender gets no support from the government and has to initiate its loan recovery process as with other loans. Lenders of private student loans are therefore more selective of who they are lending to, their lending rates may be slightly higher, and some of them may also demand collateral or a guarantor.

What is Student Loan Consolidation?

Now, let’s look at what student loan consolidation is all about. It usually happens that students take more than one loan to finance different courses. Loans are relatively easy to obtain, but the problem starts when repayment time comes. Each loan taken by the student is a separate repayment obligation.

Repayments against a number of separate loans add up to a sizeable amount, which many people (who are no longer students, but are full-fledged earners) find difficult to shoulder.

This is where consolidation comes in. In student loan consolidation, all the separate loans taken by the individual are clubbed into one loan with a single repayment plan, which usually works out lower monthly payments (in federal student loans, the difference could be as much as 50 per cent). Consolidation services are provided by specialist institutions and there are many intermediaries in the United States who draw up consolidation plans.

Student Loan Consolidation in Brief:

Student loans in the United States are broadly of two types: federal and private. Banks and financial institutions that provide student loans are more liberal with federal students because repayment is guaranteed by the government. The problem with student loans usually starts when the student has completed education and started earning, when he or she has to start repaying the loans taken as student.

Student loan consolidation is all about clubbing into a single loan all the loans a student had taken, so that the repayment is in the form of a single installment instead of one installment for each loan. Student loan consolidation usually results in a lower combined installment. There are many agents/brokers in the market provide student loan consolidation services in the United States.

How to calculate fixed interest rate for student loan consolidation?

This article presupposes that you know what a federal student loan is and what federal student loan consolidation is. We shall therefore only touch upon the benefit of consolidation here, which is that the monthly repayments on a consolidated student loan is lower than the total of monthly repayments that would have to be made if the different loans were not consolidated.

The lower monthly repayment on a consolidated student loan is due to a lower, fixed interest rate applicable after consolidation and, often, a longer repayment period. We shall now look at how this fixed interest rate is calculated. The fixed interest rate for a consolidated federal student loan is the weighted average of the interest on each unconsolidated loan that is being consolidated, rounded up to the nearest one-eighth of 1 per cent but within a ceiling specified at 8.25 per cent. Let’s work out an example.

Suppose we are consolidating the following three outstanding federal student loans taken by a single individual:

• USD 10,000 at 5.99% interest … (a)
• USD 7,500 at 6.79% interest … (b)
• USD 5,000 at 5.39% interest … (c)

First step:

Multiply each loan balance by its interest rate. So, we have:

10,000 x 5.99 = 59,900 … (d)
7,500 x 6.79 = 50,925 ….. (e)
5,000 x 5.39 = 26,950 ..… (f)

Second step:

Add the products: (d) + (e) + (f), i.e.: 59,900 + 50,925 + 26,950 = 137,775 …. (g)

Third step:

Total the outstanding loan balances: (a) + (b) + (c), i.e.: 10,000 + 7,500 + 5,000 = 22,500 … (h)

Fourth step:

Divide the sum from (g) by the sum (h), i.e.: 137,775 / 22,500 = 6.123 … (i)

Fifth step:

Round up (i) to the nearest 1/8th per cent, i.e.: round up 6.123 to the nearest 1/8th per cent = 6.125

Thus, the fixed interest rate for this consolidated loan would be 6.125 per cent.

Rounding up of decimals:

To assist you in calculation after the fourth step, the following should help:

If the decimal place of the rate is .001 through .125, round it up to .125.

Similarly, if it is .126 through .250, round it up to .25.

If .251 through .375, round up to .375.

If .376 through .500, round up to .5.

If .501 through .625, round up to .625.

If .626 through .750, round up to .75.

If .751 through .875, round up to .875.

If .876 through .000, round up to .00

Summary:

In this article, we have taken a look at how the fixed interest rate on a consolidated federal student loan is calculated. Remember, though, that student loan consolidation is a specialist business because there are many rules and regulations in place – such as rules of debt forgiveness – which can change with time, and which you cannot be expected to be always aware of. Therefore, do calculate your fixed interest rate as shown in this article, but do select a professional consolidator too.

Why is student loan consolidation an advantageous option?

STUDENT loan consolidation is the combining of two or more student loans into a single loan with a single monthly repayment. US citizens take student loans to wholly or partly finance their education

The loans are taken during the student-years and repaid in monthly installments once the debtor starts earning. Student loans are of two types: federal, and private. Federal student loans are those whose repayment is guaranteed by the federal government. If the debtor, for any reason, fails to honor repayment commitments, the federal government steps in and makes the payment to the lender, usually a bank, and recovers the money from the debtor.

Given this guarantee, federal student loans are easier to consolidate. Private loans, on the other hand, are given to students without any state guarantee, i.e., at the lender’s risk. Consolidation of private student loans therefore involves more stringent checks on the debtor’s creditworthiness and is entirely at the discretion of the consolidator. Let’s now look at why student loan consolidation is an advantageous option.

Lower monthly repayments

The existence of student loans is fundamentally a public acknowledgement of the importance of education. The availability of student loans is an endorsement of the principle that financial constraints must not to be allowed to stunt the education of any deserving American.

However, it happens in most cases that what begins as a single loan for a single educational course adds up to two or more loans as education progresses and the student wants to take up further or higher studies. In such scenarios, the debtor is burdened with two, three or more loans with each loan being treated separately. Student loan consolidation does away with such multiplicity of loans and clubs them into a single loan with a single monthly repayment.

Advantages of the Student Loan

The bottom-line benefit of student loan consolidation is: economy, hence better management of money. If the facility of student loans confirms public acknowledgement of the need for an educated society, the option of student loan consolidation is further indication of the society’s willingness to minimize the impact of loan repayments on the normal life of the ex-student.

There can therefore be no legal or moral justification not to consolidate student loans, especially if the loans are federal in nature. US citizens should make maximum use of this facility, the like of which does not exist in many countries of the world.

More cash in hand

The shrinking of two or more installments into a single installment usually results in lower monthly payouts. This enables the debtor, now no longer a student, to manage his or her finances more efficiently and have greater cash in hand for the new expenses that become necessary at the start of one’s career. These new expenses could include payments against mortgage, car, vacations, and so on. In case the debtor decides to start family life, the extra cash in hand comes handy.

Types of Federal Student Loan Consolidation

Federal student loans

Federal student loans are loans extended to students in the United States with payback guarantee provided by the federal government. By the time a student completes education and enters a career, he or she has usually taken a number of loans.

When these different federal loans are added up into a single loan, the interest rate on the consolidated loan is less than that on the individual loans and monthly repayments too are lower. The federal government itself offers student loan consolidation plans designed to meet the different needs of different students.

• Standard Student Loan Consolidation: This plan is suitable for students who can pay a fixed amount every month for a maximum period of 10 years. If the consolidated loan is of a big amount, the interest rate is not a mater of serious consequence. You can pay back the entire consolidated loan in less than 10 years if possible and you will not have to pay prepayment penalty. But the entire loan must be cleared within 10 years.
• Extended Payment Plan: This is same as the Standard Student Loan Consolidation plan described above, except that the repayment period varies between 15 and 30 years. The bigger the loan, longer is the repayment period allowed.
• Graduated Payment Plan: This plan is preferred by students still in school. Repayment starts only after the student has graduated and taken up a job. The payment amount starts low and increases every two years. The repayment period allowed under this period is 15-30 years depending on the size of the consolidated loan and the earning capacity of the borrower (the principle assumed here is that salary will increase with time, hence the borrower can pay higher installments as his or career progresses).
• Income Contingent Payment Plan: This is the most complicated of the four plans. It takes into account the borrower’s income level over a period of years in addition to the family’s gross income, assets, mortgages, and such criteria.

US Federal Government

The US federal government wants to make repayment of student loans easy on the borrower, which is why it has formulated the above four consolidation plans. Which plan is suitable for you, depends on your own needs and preferences.

If you are into a high-paying profession, perhaps the standard plan is best, since it involves a fixed monthly payment for a maximum of 10 years. If you take up a career in which the starting remuneration is somewhat low but will increase as you gain experience, the graduated payment is perhaps the one for you. However, the most popular plans seen thus far are: the extended payment plan, and the graduated payment plan.

Welcome to Student Loan Info

Student loan consolidation is simply a combination of the various loans students or their parents take out during the educational years and creating one loan from a single lender. A balance is then created so that all the other lenders can be paid off in a manner that eases the burden off the debtor.

Student Loan Consolidation is one of the most basic loan programs that give relief to students and their parents having taken education loans and are now repaying them whether in school or not. Student loans can break a student’s back, as the loan and interest rates keep piling as students get out of school and start to struggle with their work.

When a student loan consolidation company offers a loan consolidation students have to stop and ask why. When numerous student loan consolidation services rave about their program students again have to determine whether their services are to the student’s advantage.

There is no doubt that student loan consolidation programs are to the student or their parent’s advantage but without the relevant information student loan consolidation programs can become student loan scams. So our site offers students a chance to get a crash course in student loan consolidation so that they can make an informed decision when opting to consolidate their student loan.

Private Loan Consolidation

Private loan consolidation means combining your outstanding private education loans into one loan, including private loans used to cover educational expenses such as tuition, housing and/or other educational expenses. This is in addition to already consolidated private educational loans. Consolidating your private educational loans allows you to lower your monthly payment significantly by lengthening the term of your loans, while receiving a low variable interest rate. This is possible even if your private educational loans are held by more than one lender or are of different types.

Eligibility

Eligibility to consolidate private educational loans is based on the following criteria:

Be at least 21 years old at the time of application
Have a minimum of $7,500 in US issued private educational loans
Are in repayment status of private education loans at the time of application
Have good credit standing
Are a US citizen or permanent resident (eligible non US citizen)

Benefits

Consolidating private educational loans permits several benefits.

Simple repayment terms
Low, variable interest rate
No penalties for prepayment
One low convenient monthly payment to one lender rather than various monthly payments
Yyou work with one loan consultant throughout the process of consolidating your private educational loans.

Process

The process of consolidating your private educational loans is made simple and fast .

Begin an application either online or over the phone to receive an instant credit decision, interest rate information, and fees.
Sign and return your completed application. Consolidations are normally complete in approximately 6-8 weeks.
Continue to make payments to your current lender until you are notified that the consolidation is complete.
Receive your new repayment information in the mail.

Payment Options

Repayment begins approximately 30 days from the time your private consolidation loans is funded.
The repayment term is a maximum 30 year plan, regardless of private consolidation balance. You may choose one of several repayment options for your private loan consolidation, and there is NO penalty for early repayment

Equal Payments: Standard payments are made according to principal and interest over a 30 year term. This equal payment option allows equal monthly payments over the life of the loan
Select 2/Graduated Payments: Allows for interest-only payments for the first two year of repayment. Beginning the third year, payments increase to level installments of principal and interest payments for the remaining life of the loan.
Select 5/Graduated Payments: Allows for interest-only payment for the first two years of repayment. During the third through fifth year, payments increase to include a portion of principal. Beginning the sixth year, payments increase to level investments of principal and interest payments for the remaining life of the loan

Tax Benefits

Consolidate your private education loans and take advantage of tax benefits offered by the Federal Government.
By way of the Taxpayer Relief Act of 1997, the Government now permits individuals to deduct the interest paid on loans taken out to attend eligible educational institutions
Ability to deduct up to $2,500 in student loan interest. Taken as an adjustment to income, allowing the deduction regardless if you itemize deductions on Schedule A of your 1040.
Deductions phased out for taxpayers with adjusted gross incomes of $50,000 to $65,000 [single filers] and $100,000 to $130,000 [married filing jointly]. Taxpayers who are married but file separate returns are not eligible.

Deferment and Forbearance

Fed does not offer deferment options at this time. Forbearance may be available on a case-by-case basis.

Student Loan Consolidation

Loan consolidation is the channel through which you can bring all your loans under one single policy and reduce the monthly payments by increasing the duration of the loan. Consolidation has loads of benefits, some being:

Lower rate of interest
Locking in loans at a lower interest rate
Lower monthly payments
Worrying about just one loan instead of many
Longer repayment schedule

Bear in mind that we are talking specifically about student loans. There is consolidation available from other type of loans too, but we deal with only your student loans.

The logic behind consolidation is simple. consolidation merges all your loans and bills into one single payment. It reduces your (the borrower's) monthly bill of loan repayment. In simpler terms, think of it this way: If you have to pay $100 in 5 years, you pay $20 every year (ignoring any interest component), and if you have to pay the same $100 in 10 years, you pay $10 every year. And in certain cases, the monthly payment burden gets reduced, and the loan payment period also doesn't get increased. This is what consolidation does; it reduces your monthly expenditure on loan repayment and gives you that extra cash in hand.

Now to tell you a little bit more about the Student Consolidation Program. If your loan is eligible to be consolidated under this program (see the list below) then you don't have to worry about variable interest rates anymore. Under the Student Consolidation Program, the interest rates are fixed based on many technicalities such as the amount of loan outstanding, the interest rate currently paid, etc. This rate of interest would be fixed throughout the life of your loan. So no more watching the interest rate markets for fluctuations that can hamper your lifestyle.

The list of loans that can be consolidated under the Student Consolidation Program:


Unsubsidized Federal Stafford Loans
Federal Parent Loans for Undergraduate Students (PLUS)
Federal Supplemental Loans for Students (SLS)
National Direct Student Loans (NDSL)
Health Professions Student Loans
Federal Perkins Loans
Subsidized Federal Stafford Loans
All Federal Direct Student Loans (Direct Loans)
Health Education Assistance Loans (HEAL)
Nursing Student Loans
Student Consolidation Loans
Federally Insured Student Loans (FISL)
Loan from the Department of Education

If your loan falls under any of the above, then loan consolidation is a realistic option for you.

Irrespective of whether you are still a student or you have graduated, you can consolidate and ensure lower interest rates and better terms.

We reduce your loan burdens. We offer you the following terms:


Lock in low interest rates.
No credit checks, No fees - Absolutely Free!
Loan period extendable to up to 30 years
Lower monthly payments by nearly 50%
Complete confidentiality maintained
Free live pre-qualification by government-approved agents
It's a U.S. Government Program
And it takes just 60 Seconds to Qualify

Federal Loan Consolidation

Federal loan consolidation allows you to consolidate your outstanding federal education loans into a single new loan, even if your loans are currently held by more than one lender and are of different loan types. By consolidating your student loans, you can significantly lower your monthly payments by lengthening the term of your loans and locking in a low fixed interest rate. Most importantly, you can save thousands of dollars during the entire repayment term.

Additional Federal Loan Consolidation Benefits:
Fixed rates as low as 6.75%
Extended repayment term with lower monthly payments
No fees
No Credit Check
No prepayment penalties
Seven flexible repayment plans
Turn several monthly payments into one

Deferment and forbearance available

Fixed rates as low as 6.75%

By locking in the current low rates, you can lock in a fixed rate as low as 6.75%!

Extended repayment term with lower monthly payments

By consolidating your loans you can extend your repayment term up to 30 years, depending upon your loan balance. This has the added benefit of lowering your monthly payments, so you are left with more money in your pocket each month.

No fees

There are no fees or costs whatsoever for a federal loan consolidation .

No credit checks

There are no credit checks whatsoever for a federal loan consolidation . As a matter of fact, consolidating your loans can actually improve your credit rating, as a result of having lower monthly payments. This can actually make it easier for you to qualify for mortgages and other major loans.

No prepayment penalties

Although you have the option of extending your repayment term, you will not be charged any fees or penalties for paying off your loans early. This means that if you take advantage of the low consolidation interest rates, you can save thousands even if you pay down your loan early.

Seven flexible repayment plans

Seven different repayment plans for your consolidation loans, giving you extreme flexibility for your repayment. We offer the following plans: Equal Payments:

This option provides equal monthly payments over the term of the loan.

Select 2/Graduated Payments: This option allows for interest-only payments for the first 2 years of repayment. In the third year, payments increase to level installments of principal and interest payments for the remaining term of the loan.

Select 5/Graduated Payments: This option allows for interest-only payments for the first 2 years of repayment. In the third through fifth years, payments increase to include a portion of principal. In the sixth year, payments increase to level installments of principal and interest payments for the remaining term of the loan.

Income-Sensitive Payments: This option provides for payments to be adjusted annually, based on your expected total monthly gross income from employment and all other sources. Your account will initially be disbursed at the Select 2/Graduated repayment plan. After the consolidation loan is disbursed, you must contact your servicer to qualify. Once eligibility is determined, your servicer will calculate your new payment.

Extended Equal Payments: This option allows up to a 25-year repayment term of equal payments.

Extended Select 2 Payments: This option allows up to a 25-year repayment term with the Select 2/Graduated Payment plan.

Extended Select 5 Payments: This option allows up to a 25-year repayment term with the Select 5/Graduated Payment plan.

All extended repayment plans are for qualified borrowers with more than $30,000 in eligible loans. Applicants interested in any of the extended repayment plans should contact one of our counselors to determine eligibility.

Combine several monthly payments into one If you are currently making payments to more than one lender, consolidating your loans allows you to eliminate the complications of having to make multiple payments. Instead, you can combine those payments into one easy monthly payment.

Deferment and forbearance available Loan consolidation is done through the federal loan consolidation program, and thus you retain government benefits such as deferment and forbearance. Like your current federal loans, federal loan consolidations are guaranteed and insured by the federal government. A deferment is a temporary suspension of loan payments for specific situations such as reenrollment in school, unemployment (up to 3 years only), or economic hardship (up to 3 years only). Forbearance is a temporary postponement or reduction of the payments on your consolidation loan for a period of time due to financial difficulty.

About Loan Consolidation

The Higher Education Act (HEA) provides for a loan consolidation program under both the Federal Family Education Loan (FFEL) Programs and the Direct Loan Program. Under these programs, a borrower’s loans are paid off and a new consolidation loan is created. These programs simplify loan repayment by combining several types of Federal education loans (that may have different terms and repayment schedules or may have been made by different lenders) into one new loan. The interest rate may be lower than on one or more of the underlying loans. In addition, the monthly payment amount on a consolidation loan is usually lower and the amount of time to repay may be extended beyond what was available in the separate loan programs. These features should result in more manageable debt and should make borrowers less prone to default.