Federal Student Loan Consolidation Made Easy

Federal programs

There are two federal student loan consolidation programs in the united states that allow a student to consolidate all student loans into one single loan:

1. The federal family education loan program
2. Federal direct student loan program

the above two programs were established to address the following loan types:

* Stafford loans
* Plus loans
* Perkins loans

The offer of fixed interest rate for the whole loan life cycle is one key characteristic of consolidation loans by federal government targeting at students.

A brief history of the federal program

The federal student loan consolidation program was created in 1986 to allow graduates with more than one federal loan to consolidate them all into one single loan package. Such consolidated loans had a variable interest rate from 1986 to 1998 but in 1998, the us congress acted to convert the variable rate to one of a fixed rate weighted average. The latter came into force on February 1, 1999. Before this time, a consolidated student loan from federal government used to have a variable rate. That rate was determined by either the university or the lender, whoever is the loan originator.

In 2005, the government accountability office (GAO) stepped in, took under consideration the savings of consolidating all of the consolidation loans. On the basis of future variations in interest rates, loan volume, percent of defaults and cost estimates from the department of education, GAO concluded that this would cost an additional $46 million. GAO also concluded that this cost would be offset by a savings of $3,100 million which was in part by avoiding a $2,500 million cost in subsidies.

Interest implications

When compared with student loans offered by federal government, the term of payment for federal consolidation loans is longer. It can range anything from ten to thirty years. Even though monthly repayments are lower, the overall cost of the term of the loan is actually higher than with other federal student loans.

The fixed interest rate is derived from using a weighted average of the consolidated loan interest rates. This is done by assigning relative weights according to the amounts borrowed and then rounded up to the nearest 0.125%, but capped at 8.25% interest. Post-graduation grace periods and special forgiveness circumstances are two features of the original loans that have not been carried over to the consolidation loans.

Don't rush to decide

if you have existing loans that cost you considerable money, despair not. Consolidating your loans may be the way to go. However, it is important to appreciate the fact that federal student loan consolidation is not always suitable for every borrower with federal student loan payment.

Ray Young trains elementary school trainee teachers part-time at a teacher training college, and is passionate about helping people becoming financially more prudent and independent through writing and publishing online. He writes on topics like Health Care Insurance. Making it to college or university will be one of the best things that you can ever do to get to the places you want in life. Never let money come in the way to stop you from going to college when you can't pay for the education yourself. To get all the insights and help you need on How To Financially Support Yourself Through College, check out Student Loan Consolidation.

Article Source: http://EzineArticles.com/?expert=Ray_Young

Student Loan Consolidation - How to Save Money and Improve Your Credit Score

Private and Federal, the Differences

There are different avenues to consolidate loans that you have obtained as a student. You can opt for private consolidation or federal student loan consolidation. If you opt for the latter, your existing debts shall be taken over and repaid by a debt consolidation company or by the Department Of Education itself. This depends on the type of Federal low interest loan that you have obtained.

Interest Rates

Interest on such loans are charged at an annual rate ranging from at least 4.7% to not more than 8.25%. This rate is applicable to Federal Stafford Loans. For Plus loans, the rate charged hovers around 9%. Given below are some useful guidelines you can use to consolidate your student loan.

Currently, you can consolidate you loan once with a private institution. If you want to re-consolidate the loan, you have no choice but to choose the Education Department. When you consolidate the second time, your interest rate remains the same.

What are the Benefits of Consolidation?

By combining all loans into a single one, the student need not deal with different lenders. Further, the interest rate shall change as per weighted average calculations with reference to the current interest rate.

This transaction resembles a refinancing transaction with the sole difference here that the interest rates remain the same. Private lenders charge a high interest rate on their loans. Consolidation services helps save money. This transaction improves the credit score of the student. Your monthly outflow shall come down and dealing with a single lender will make it easy to keep track of loans. A few options available to students include Federal Stafford, Perkins, Parent PLUS, Government Direct Credits, etc.

Choosing the right services helps you save time. Further, the formalities are taken care of leaving you free to focus on your studies.

Want to know more tips about Student Loan Consolidation? Visit the website: http://www.studentloan-tips.com

Article Source: http://EzineArticles.com/?expert=Michael_Clifford_Ramsey

Consolidate Federal Student Loans - How to Consolidate Student Loans in a Recession

If you are a recent college graduate or if you're about to graduate, you probably began school when the economy seemed bright and rosy. Like most students you probably took out quite a few loans anticipating that you would be able to easily pay them back once you graduated and got a job. Now that the our economy is burning like a candle that was lit with a blow torch, what once seemed easy may, in reality, be quite a bit more challenging.

The odds are that you are obligated to repay anywhere from $400 to $1,000 or more per month for your loans and since you only have a limited grace period it's understandable if you are beginning to freak out. If that sounds like you, then stop it!

Even though things don't look that great on the surface, you can get help. You are still able to lower your monthly payments with a federal government student loan consolidation.

Federal student loan consolidation was set up by the US government to help students who have more than one loan they are trying to repay. For example, if you have both a Perkins Loan and a Stafford Loan and you can't make your combined monthly payments this plan could be what you're looking for.

Essentially, one of the student loan consolidation companies will help you to consolidate your student loans into one loan with one payment rather than having multiple loans with many payments due throughout the month.

When you consolidate federal student loans, this single payment will be less than the total of your other payments combined.

The interest rate may be approximately the same or it could be lower, depending upon which of the four payment plans you choose.

However, the term of this loan will probably be longer than the terms of the loans you are now carrying. This is one of the primary reasons that your payments can be reduced by hundreds of dollars per month. You may end up paying more for your loans in the long term, but the bottom line is that

(1) it will be easier for you to repay them, and

(2) your credit rating will not be impaired for non-payment of these loans.

Loan consolidation companies help over 100,000 students a year to consolidate student loans. At the time this article is written, even though Sallie Mae has suspended participation in the federal consolidation loan program because of severe legislative cuts made by Congress, entities such as the Federal Student Loan Program, Citibank, and Nelnet are still offering help with student loan consolidations.

And to find out more about how to consolidate federal student loans and to get more free information about student loan consolidation, take a look at http://www.StudentLoanConsolidationReport.com now.

(c) Copyright - Don Granite. All Rights Reserved Worldwide.

Article Source: http://EzineArticles.com/?expert=Don_Granite

Consolidate Private Student Loans

Just to let you know, you are not the only graduate who has to deal with multiple private student loans. It is difficult to manage your financial condition with multiple loans on your back and other expenses to take care of. How can you remedy the situation? Have you ever thought of going to consolidate your private student loans?

When you are doing so, there are 3 things you need to look out for.

1. Loan consolidator

Unlike federal student loan consolidation, private loan consolidators charge various interest rates for your loans. The interest rate charged is according to the market rate. So, when the market rate is low, you can enjoy low interest rate. But when the market rate shoots up to the maximum cap, you will have to bear the burden.

And to get your business, different loan consolidators will offer different benefits when you consolidate your student loans with them. Some of them may offer higher interest rate but they might offer lucrative packages that can benefit you in the long run and vice versa. So, you have to look into your need before you talk to the loan consolidators.

Lastly, you have to be extra careful when you are applying for online private student loan consolidation. This is because there are a lot of agencies which claim to consolidate your loans are actually referring your loans to firms that really consolidate student loans. You can actually get better interest rate when you deal directly with the responsible firms.

2. Extra cost and penalties

When you are consolidating your private student loan, you will also want to be clear of the extra cost that is involve in your consolidated loan. Some loan consolidators might charge you for an application fee and some might charge you processing fee for credit history check.

And to let you know, many loan consolidators are withdrawing their pre-payment penalty (penalty that you need to pay when you settle your loan before the agreed loan period). So, be sure that you ask the loan consolidators about this and if they are unwilling to withdraw this for you, you can always look for another loan agency.

Although you can enjoy incentive with on-time payment, what if you are late with your monthly payment? How much penalties are they going to charge you? You have to be clear on every detail of your loan consolidation.

3. Promotions

And since the loan consolidators are competing for your business, it is common that they will run promotions once in a while to draw in new business. So, when you are talking to the loan agencies, remember to ask them about the promotions. It will be good to have some incentive to lighten your burden.

Sometime the loan agency will not inform you about the promotions. After all, they are affecting their profit when they run the promotions. So, you have to take the initiative and keep yourself update so that you can get on the boat before the expiry date.

To learn much more about student loan consolidation, visit StudentLoanConsolidationHowTo.blogspot.com where you will find this and much more including student loan consolidation comparison.

Article Source: http://EzineArticles.com/?expert=Michael_Wai_W

Bankruptcy and a Federal Student Loan

If you are looking for information on bankruptcy and a federal student loan then you have come to the right place. You may feel that your federal student loan is making your financial life hell at the moment but it does not have to be like that. Bankruptcy is and should always be a last option. What will happen if you decide to go bankrupt though is not as bad once you think about it. It means that you will have a totally fresh slate financially. Although you may be marked by a few financial organizations for a couple of years and will struggle to get money from banks lent to you.

Firstly the main thing that you need here is communication with your federal student loan company. If you do not talk to the they will not know what you want and lots of people do this. Do not be one of them and you will find a way through this difficult financial time. Talk to them and mention your financial woes and that you may even consider bankruptcy. Because they will definitely get no money if you go bankrupt because you start over again they will let you pay at a highly discounted rate just so they get something from you. Sad but true.

Then when you have completed this stage you might want to look into something like debt consolidation. This is where you get all of your student loan and other debts that you are struggling to pay and you give them to a student loan debt consolidation organization and they pay it off for you and you pay one single monthly payment over time. The charge is surprisingly small too.

To learn how to pay of your student loan and get the great feeling of freedom that comes with paying off your student loan, Click here for Bankruptcy Federal Student Loan

Article Source: http://EzineArticles.com/?expert=Richard_Shelmerdine

read more about Federal Student Loan