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Is Student Loan Consolidation Alone Enogh For You?
Posted by: | CommentsWhen you have several thousands in student loans to pay back, there is little doubt that consolidating your student loans will help you reduce your monthly payments. By consolidating your loans, you reduce all your loans into a single loan therefore having to only pay one lender. Consolidating your loans also extends the amount of time you have to repay you loans thereby making a significant reduction in the amount you have to pay each month.
Nevertheless, for some people, consolidation alone might not be enough to bring down your monthly payments to a level you can afford. If you find yourself in such a situation, you might consider taking an income-based repayment plan. This plan is an new payment plan for holders of federal student loans. This works by offering payment caps based on your income and the size of your family. In general, your repayments will be less than 10% of your income and if after 25yrs you still have repayments to make, those will be forgiven.
This plan is more suitable for people who owe large amounts of student loan debts and have low income. For example, students who owe debt from undergraduate and graduate schools. This has become very popular with medical and law students.
The income-based repayment plan is not for everyone. If loan consolidation is OK to bring down your monthly repayments to a level you can afford, then there is no need to go for IRB. But if you find yourself in the situation where even after consolidation you still can’t afford you monthly repayments, then you should apply for income-based repayment plan.
May Gruaduates – Grace period almost up. Consolidate Now?
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Student loan consolidation
So it’s already October and May graduates are about to start paying off their federal student loans. Your grace period is about to end and you are considering all the options available to you. If consolidation is one of your options, I can imagine you going hysterical not knowing if you can still consolidate now that your grace period is almost up.
It is always advisable to consolidate your student loans before the end of your grace period. Doing so gives you certain benefits. For example, if you were given a federal student loan before July 1, 2006, you should consolidate before the end of your grace period. This is because the interest rates on your loans will move up to 2.48% from 1.88% at the end of your grace period.
For those of you who have federal loans that you received after July 1, 2006, you will receive no interest rate benefit for consolidating before your grace period expires. The rates on these loans are fixed and will not change. You only benefit here is the extended time and lower monthly repayments you’ll receive for consolidating.
The best time to consolidate is now
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sleepless nights over your debts?
Things are tough all over. Money is tight, jobs are scarce. The economy is on the mend, but it looks like it might take a while to recover. Faced with money worries, those with student loans may be wondering how to keep themselves above water, making their monthly payments without sliding toward default. Student loan consolidation is an option strongly worth considering.
Those with one or more student loan payments are eligible for consolidation. Under consolidation, your school loans are refinanced into a single loan, often with much lower monthly payments. Some calculations made by private consolidators estimate up to 53% lower monthly payments, depending on your loan situation.
Other benefits of consolidation include the option to renew loan deferments, protecting some borrowers against interest accumulation during a period of nonpayment. This can be helpful for those looking to regain employment or strengthen their employment options.
There are four plans available to those looking into student loan consolidation. These plans can shorten or lengthen your repayment period, lowering or raising your monthly payments depending on your current financial situation. Those with student loan consolidation can switch among these plans over the course of repayment to reflect their changing needs.
Some student loans have variable interest rates, which fluctuate over time. With consolidation, the rate remains fixed for the life of the loan. This can lower your overall payment and provides for stability and fewer surprises: you will know how much your payments are, now and in the years to come.
As the economy works to rebuild, you can take steps to secure your own financial future. Lowering your monthly payments through student loan consolidation might be one great way to do so. Check with the Federal Direct Consolidation Loan website or your private lender to see if student loan consolidation is right for you.
Student Loan Consolidation: How can it Help?
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Put all your student loans in one bag
Student loan consolidation is the solution for career minded students who are losing sleep over their debts and are worried about all the loans they will need to pay after the conclusion of their studies. As young people leave college and are venturing into the world of work, the last thing they need to be worrying about is how they are going to pay back all the student loans they have accumulated over the past few years. Student loan consolidation is the answer to this problem and they are proving to be very beneficial to students all over the country.
During their studies, a student will tend to accumulate a few different loans which all have individual and varied interest rates and terms. The idea of student loan consolidation is to take all of these separate loans and create a single easy and affordable monthly payment which will cover all of them at once. This allows the student to concentrate on their career and avoid further debt and financial concerns by allowing them to save more money on their interest rates and not to have the hassle of paying multiple companies and deal with several different banks and accounts at the same time.
In today’s market, student loan consolidation programs are becoming more popular as the number of providers is increasing all the time. A range of rates and schemes are available so that each student is able to find the most appropriate and suitable program for their specific circumstances. The flexibility and lack of extra charges and fees allow for these schemes to help students enter their new lives after education with a stronger financial base and less stress, paperwork and lenders to deal with on a monthly basis. By allowing students to free up more available cash each month, they are able to save, invest and budget their finances in a more secure and reliable way for the future.
As well as having no fees and charges attached to them, student loan consolidation schemes also have the added benefit of being available for students without a cosigner or credit check taking place. Anyone who is a student is eligible for these programs and can apply for the debt consolidation program from their local government. There is no early payment charges included which allows students to pay the loans in full whenever they may wish without incurring any penalties.
The interest rate of the student consolidation programs is comprised of an average taken from all the current loans a student has and what their individual interest rates are. Although they will vary depending on the figures pertaining to the individual, they are unable to be set above 8.25% and so the student consolidation loan interest rates will never be above this figure.
If you are close to paying off your loans or you only have one or two with low interest rates already then student loan consolidation schemes are not likely to be the best option for you, it is important to make sure that you perform comprehensive research and decide which is the most advantageous path for you to personally take in your specific situation.
Take the Direct Route to the Best Student Loans with FAFSA
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Millions of students each year head off to college to obtain a higher education degree. Statistics show that employees with a college degree make more money than those that do not hold a degree. The problem that many college-bound students face is figuring out how they’re going to come up with the money they need to pay for college. While there are a multitude of sources you can turn to for student loans, the first place you should start is with the Free Application for Federal Student Aid (FAFSA).
What is FAFSA and How it Can Help
FAFSA is a program offered by the U.S. Department of Education in an effort to support secondary education. Its programs provide financial aid for college to eligible student applicants. The FAFSA program offers three levels of financial aid including federal grants, work study programs and federally funded student loans. It’s free to apply using the FAFSA application http://www.fafsa.ed.gov/FOTWWebApp/complete013.jsp . The financial aid awarded is based on your financial need rather than credit scores and other qualification requirements that a private lender or bank may require. The FAFSA program disburses over $80 billion in federal aid each year and it’s the logical first step to obtaining the best student loan programs.
Federal Student Loans versus Private Loans
Federal student loans provide many benefits over private student loans, which is why applying for federal loans should be your first step in obtaining financial aid. If you don’t obtain enough money in federal aid, you can always supplement with private student loans.
Benefits of federal student loans:
* Lower interest rates than private student loans
* Fixed interest rates
* More attractive repayment terms and options than private loans
* Repayment is usually deferred until six months after graduation from college
* Repayment plans can be based on your employment income after college
* Loan forgiveness options
* Loan payment deferment if you return to school
How to Apply for a Federal Student Loan
Applying for federal student loans, grants and work study programs is relatively easy and can all be accomplished with one application, the FAFSA form. The form can be completed online at www.fafsa.ed.gov. Be sure to complete the form in its entirety and if you need assistance or have any questions about completing the form, refer to the Federal Student Aid http://federalstudentaid.ed.gov/ government site. On the application, you’re asked to supply the schools you’re interested in attending. The schools disburse the funds to students so the colleges you provide on the FAFSA form will notify you of the amount you’re eligible to receive.
When Federal Aid isn’t Enough
There are times when federal aid covers all of your college education expenses including tuition, books, and room and board. Then there are times when federal aid falls short of covering all of your expenses. In this case, you may need to apply for some private student loans to make up the difference. So how can you get the best private student loans?
* Start with your bank. The first place to start is with the bank you have your checking or savings account with. Since you have an established relationship with the bank, you’re more apt to receive more favorable interest rates, repayment terms and conditions than approaching a bank that you don’t have a history working with. If you don’t have an account yet, approach the bank where your parents have their accounts. If necessary, your parents can be a co-borrower to help you get approved for the loan.
* Private loans. If you have a family member or friend of the family that may be able to loan you the difference, this is a logical and cost effective way to pay for the costs that federal aid doesn’t cover. Since it is a private agreement between you and someone you know, you can negotiate the interest rate and repayment terms and conditions. Be sure to make it official and put everything in writing and create a promissory note that spells out the repayment terms.
* Shop and compare. Just as you would with any major purchase, be sure to collect information for and compare at least three student loan options from banks, credit unions and other student loan lenders. Be sure to compare interest rates, repayment terms, the term of the loan and other options such as deferment and loan forgiveness. Since you’re not sure what your employment and income situation will be after graduation, it’s important to know what all of your options are before deciding on the one that is most beneficial to you.
Going off to college is a very exciting time, but don’t let figuring out how to pay for it get you down. Turn to the U.S. Department of Education’s FAFSA program first to see what grants, work study and federal student loans you’re eligible to receive, which provide more favorable terms and conditions than private loans. Then turn to private student loans to make up any difference in costs. Starting with FAFSA is the most direct route to the best student loans.
Consolidating Student Loans – Myths Vs Realities
Posted by: | CommentsThere has been a lot of conflicting stories written about consolidating federal student loans. This post tries to bust a couple of myths surrounding federal student loan consolidation.
The interest rate of the consolidated student loan changes every July 1st.
This is a MYTH: The truth is the consolidated student loan interest rate is affected because the variable rate Stafford loan interest might change every July 1st. Your consolidated loan rate will remain the same if the variable rate Stafford loan rate doesn’t change.
Just as I can refinance my home mortgage, I can do the same with my consolidated student loans.
This is a MYTH: The truth being that the consolidating your student loans is a one off thing. The interest rate at which you consolidate remains the same for the rest of the life of the consolidated loan.
If I don’t consolidate within six months after graduation, I’ll loose the eligibility to consolidate.
This is a MYTH: Consolidating with six months of graduation only carries the benefit of receiving a lower interest rate on your variable Stafford loan. But you are not required to consolidate within this period. You can consolidate your student loans anytime in the future.