Posts Tagged ‘debt’

Student Loan Debt Consolidation – An Overview

In a student loan debt consolidation loan, you can combine your federal student loans into one loan with a single monthly payment. Repayment of a student loan debt consolidation loan may be significantly lower than the payment required under the standard 10-year repayment option. The Federal Family Education Loans (FFEL) Program, banks, secondary markets, credit unions and other lenders provide the student loan debt consolidation loan. The William D. Ford Federal Direct Loan (Direct Loan) Program, the federal government determines the student loan debt consolidation loan.

Most federal education loans are eligible for inclusion in a student loan debt consolidation loan, including subsidized and unsubsidized Direct and FFEL Stafford Loans, SLS, Federal Perkins Loans, Federal Nursing loans & Health Education Assistance Loans. But private education loans are not eligible for inclusion in a student loan debt consolidation loan.

To find out which loans may be eligible for inclusion in a student loan debt consolidation loan, you should contact the Direct loan Origination Center’s Consolidation Department if you are looking for a direct student loan debt consolidation loan. Contact a participating FFEL lender if you are applying for a FFEL student loan debt consolidation loan.

It should be noted that you still have the¬†eligibility¬†for student loan debt consolidation loans after your graduation, leaving school, or drop below half-time enrollment. You can also get a student loan debt consolidation loan when you are at school. However, you must attend at least half time, and have at least one Direct Loan or FFEL in an “in-school period ‘which usually means that you have been continuously registered at least half time since the loan was paid. There are some conditions that must be met for you to qualify for student loan debt consolidation loan, particularly if you are delinquent or in default, your loan holder will be able to give you all the necessary information.

If the same holder holds all the FFEL loans you want to consolidate, you must obtain a student loan debt consolidation loan from that holder, unless you are unable to get a loan with income-sensitive repayment terms acceptable to you. To be eligible for a William D. Ford direct student loan debt consolidation loan, you should have a direct Stafford subsidized or low-interest loan that’ll be included in the debt of student loan consolidation loan or have at least one Federal Family Education Loan (FFEL) programme Stafford subsidised or subsidised loan.

What you Need to Know about Consolidating Student Loans

Chances are if you’ve taken out student loans in order to finance your education you have been, or at least will be, receiving calls and offers in the mail to consolidate your student loans. There are actually numerous advantages to consolidating your student loans. In addition to gaining a fixed interest rate you can also potentially lower your monthly payments. In the event that you begin to experience financial difficulties, you may also be able to take advantage of flexible payment options with a consolidated student loan.

Unlike other types of debt consolidation programs a student loan consolidation gives you the opportunity to combine your loans into one package with more attractive terms. You also don’t have to worry about being turned down because of a bad credit score and the interest on the loan may be tax deductible. In addition, in the event of your death your survivors won’t have to worry about paying it back because the debt will be discharged.

If you have a variable interest rate student loan, consolidating the loan can also help you to lock in a lower rate before the rates increase the next year. Over the length of the loan, this one step can actually help to save you a tremendous amount of money.

Of course, in addition to the advantages there are also some disadvantages of which you should be aware. One of the most important is that if you end up lowering your monthly payment you are actually extending the length of the loan and that means you’ll pay more over the life of the loan due to increased interest. You can still take advantage of the other benefits of a student loan consolidation without this disadvantage; however. Just don’t lower your payments unless it is really necessary.

When considering lenders for a student loan consolidation it is important that you always compare the terms of each offer made to you. Consider the interest rate and length of the repayment terms to be sure you are getting the best deal possible.

If you have a mix of both federal and private student loans, you should also be aware that while both types of loans are available to be consolidated it may not be a good idea to consolidate your federal loans and private loans together in the same package. There are stipulations on private loans that are not required on federal student loans, such as no deferments, no tax deductions on the interest, no forgiveness of the debt in the event of death and no forgiveness of the loan for working in certain fields. In the event of a mix of private and federal, it’s usually best to go ahead and consolidate the private loans separately from the federal loans so that you can retain those advantages for the federal loans.

By understanding all of the factors related to student loan consolidation you will be in a better position to make a more informed decision regarding your finances.

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