Archive for March, 2010

Latest federal loan consolidation news – Mercantile Bank Corp. Q4 2009 Earnings Call Transcript

Back with more news for you today. It’s amazing how much good information there is on this stuff out there if you know where to look. Three in particular that I found really valuable were…

Mercantile Bank Corp. Q4 2009 Earnings Call Transcript

The brand's consolidation project completed during the second quarter has lowered our monthly overhead costs and significant (more…)

Should You Really Consolidate Student Loans?

If you’re pondering whether or not to consolidate student loans, consider this; all college loans have unique attributes, and not all may be perfectly suited for student loan consolidation.  Student loan consolidation is, in most cases, an outstanding option for reducing monthly payments, locking in low rates, and earning opportunities to shave money off your loan balance with lender incentives.  When you consolidate student loans, you lock in the current interest rate by allowing the lender to repay the entire amount, then repaying the lender free from government interest rate fluctuations.  

PLUS Loan – Good Choice for Student Loan Consolidation

Like many college loans, the PLUS loan (Parent Loan for Undergraduate Students) is a type of federal loan with a variable interest rate.  This means that the monthly payment will change when the government reconfigures the interest rates annually (July 1).  

The interest rates on PLUS loans are generally higher than other types of college loans so when interest rates increase, PLUS loans can be greatly affected.  Since college loans are consolidated by social security number, parents should apply separately for PLUS loan consolidation.

Perkins Loan – Consider before refinancing

The Perkins loan is a fixed rate loan and has some unique benefits that can be lost with a student loan consolidation.  The Perkins loan has a forgiveness program that will waive all or part of the repayment amount if the borrower works in specific occupations that provide a valuable service to the community. Some such eligible occupations are teachers in low income areas, nurses, and medical technicians.  

If you’re not eligible for the various loan forgiveness opportunities offered by the Perkins loan, there is still another point to consider.  Because the Perkins loan is a fixed rate loan, and because the interest rate on a student loan consolidation is determined by the weighted average of the other loans, you could actually pay a small percentage more on a consolidated Perkins loan over time.   

Stafford Loans – Good Choice for Student Loan Consolidation

Stafford loans are the most common loans, and also the most popular type to consolidate.  Stafford loans have a variable interest rate like the PLUS loan, making refinancing a smart choice.  Loan consolidation can reduce the repayment amount by up to 63% if refinanced through the right lender.  

Like the Perkins Loan, the Stafford Loan also offers a few forgiveness programs for those in certain teaching positions and other various public service jobs.  Check to see if you’re eligible for any forgiveness programs before applying to consolidate student loans.  

Health Professions Student Loan (HPSL) – Consider before refinancing

The HPSL loan for medical professionals is a fixed rate loan like the Perkins Loan.  The HPSL comes with certain deferment options that may be lost after consolidation.  

The HPSL offers a 3 year deferment period designed to give relief to medical professionals during residency.  This deferment option may or may not be lost after consolidation.  Those who have HPSL college loans should inquire with various lenders about deferment options.

Direct Loans – Good Choice for Student Loan Consolidation

Some schools offer Direct Loans, meaning that the money given to students comes directly from the federal government, not through a private lender.  Borrowers who obtain these college loans must first consolidate through the Direct Loan program, but then have the opportunity to shop around for lower interest rates.  
Beginning July 1st 2006, borrowers will face much stricter regulations when consolidating Direct Loans.  After the 1st of July, borrowers will only be able to switch lenders if their current lender does not offer a student loan consolidation with an income sensitive repayment plan.  

The two most popular types of loans are the Stafford Loan and the PLUS Loan which is the reason it’s so popular to consolidate student loans.  Many students acquire a variety of college loans that may not be beneficial to consolidate.  Student loans are not all created equal.  It’s important to understand the unique qualities of your individual loans and work with your lender to determine the option that is right for you.

Students: Consolidate Loans Now To Save Thousands In Interest

Going to college is about to get even more expensive.

At a time when rising tuition costs already weigh heavily on future college graduates and their families, Congress recently passed a Bill raising interest rates on student loans and cutting $13 billion from the federal student loan program. These higher rates promise to have a significant impact on the cost of repaying student loan debt for years to come.

The Bill impacts Stafford loans -popular because they require no credit check or test to qualify-and PLUS loans, available to parents of dependent undergraduate students, regardless of financial need.

Under the new legislation, the interest rate on new Stafford loans will jump to 6.8% from the current rate of 5.3%, while the rate on new PLUS loans will jump to 8.5% from the current rate of 6.1%. Both rates will be fixed.

The average cost of tuition, room and board has climbed at more than double the rate of inflation over the last eight years. Such hikes have also meant skyrocketing student loan debt, which rose more than 70% from $11,400 in 1997 to more than $20,000 in 2005.

The good news for recent grads or students who will graduate this spring is that they CAN still lock in a low fixed rate. But there’s not much time. With rate hikes expected to take effect on July 1st of this year, loans must be consolidated by June 30, 2006.

“Time is absolutely of the essence-particularly for this year’s graduates,” said Frank Ballmann, student loan expert and an executive vice president at consolidation leader Educational Direct. “They’ll need to act quickly after graduation to get the pre-July 1 rates, which would rise by over 1.5% on July 1 based on today’s interest rates.”

Ballmann offers the following tips for students and their parents:

• Students with $20,000 in student loan debt would pay an extra $300 in interest next year, based on the recent rise in interest rates, if they don’t lock in the current loan consolidation rate.

• The interest rate for consolidation loans can be locked in at a fixed rate for as long as it takes you to repay your loan.

• Consolidation saves money and time-lowering monthly payments with a single fixed interest rate and simplifying the loan repayment process with one monthly payment.

• There are no fees or credit checks to consolidate student loans; it is free and is a right given to borrowers under the federal loan programs, authorized in the Higher Education Act.

Should I consolidate my student loans given this specific situation?

Should I consolidate my student loans given this specific situation?

I have about $13,000 from Federal Student Loan Servicing at 3.96%. These are mostly subsidized, but I believe a small amount are unsbubed. From graduate school I have 23,000 from Sallie Mae at 6.3-6.8% Stafford, some are subed and some are unsubed.
I often pay double or triple what I owe on the higher (more…)

Five Ways Consolidating Student Loans Can Save You Money

Consolidating Student Loans Can Boost your Credit Score

Most students take out numerous loans for college, each with its own interest rate and its own monthly amount.  The plethora of different loan sources is a great benefit in terms of paying for college, but when it comes to credit rating, this long list of outstanding loans can put a serious damper on your overall score.  

By consolidating student loans, your credit report will show one combined loan, usually with a much lower overall payment, which equates to a more favorable credit rating.  By consolidating student loans, you most likely also benefit from a much lower payment, thus lowering your debt to income ratio.

Consolidating Student Loans Reduces Debt to Income Ratio and Increases Buying Power

Having a low debt to income ratio, or the monthly amount owed compared to the amount earned, makes an incredible impact on the amount of money you’ll be able to borrow and afford for a first home or reliable transportation.  

The total amount of household debt in the US last year was more than 100% of disposable income.  Rising education costs have created a vicious cycle for today’s graduating students.  As your debt to income ratio rises, so do the interest rates of each new loan.  Keeping this ratio low by reducing your monthly bills can literally save you tens of thousands of dollars over a lifetime.  

Consolidating Student Loans Reduces Dependence on Credit Cards

Having lower bills in the years following college means less reliance on high interest credit cards and other loans.  The average college student carries a whopping 6 credit cards with a total balance over $2100.  

This means that the $100 credit card purchase for new work attire could cost more than $200 over the 12 months it takes to pay the full balance.  Fortunately, smart financial planning, including consolidating education loans, can help students and young professionals live a life free of high interest debts.

By Consolidating Student Loans, You are Locked into Today’s Low Fixed Rates

Just because interest rates are low today doesn’t mean they will stay that way.  In fact rates over the last several years are lower than they’ve ever been in recent history.  It’s amazing how much a small percentage point can save or cost on a college education bill over the course of a loan repayment.

The Federal Consolidation Loan allows you to lock into today’s low interest rates when consolidating student loans.  Consolidation loans usually have a longer repayment period and a lower monthly payment than is available on the underlying education loans.  

By Consolidating Student Loans, you can Receive Additional Interest Rate Discounts

Companies that specialize in consolidating student loans like offer additional consolidation benefits such as auto payments, and consecutive payments.

  • Auto Payments:  Receive a reduction in your interest rate for making your payments automatically from your bank account when you consolidate your student loans.
  • Consecutive Payments:  Some student loan consolidation companies give you the opportunity to reduce your repayment interest rate up to one full percentage point by simply making payments on time.
  • No Interest Deferral:  Take advantage of the flexibility of student loans by deferring loans during qualified times.  While enrolled in graduate school, serving in the military, or volunteering with the Peace Corps, you can not only defer payments, but stop interest from accruing as well.
  • Grace Period: Consolidating during your grace period allows you to lock in a rate that is lower than the standard repayment rate.


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