Federal Student Loan Consolidation
By admin at 6 August, 2007, 7:45 am
As the costs of after-school education continue to swell, translating the college-degree-dream into a reality takes a lot more than just passion. Students need to shore up their passion with the right amount of money that will enable them to pursue the academic course of their choice. Federal student loan consolidation is a fitting option for students, as it facilitates affordable, hassle-free education.
You can consolidate a whole host of federal student loans such as Stafford Loans (Subsidized as well as Unsubsidized), HEAL/HPSL Student Loans, Federal Direct Stafford Loans (Subsidized as well as Unsubsidized), Parent PLUS Loans, Federal Direct Parent PLUS Loans, Perkins Loans, and Nursing School Loans.
Benefits of Federal Student Loan Consolidation
Some of the key benefits of Federal Student Loan Consolidation are mentioned as under:
• Makes things easier for you by rolling all your education loans into one.
• You have to make just one easy-on-pocket payment every month.
• Trims down the monthly student loan payment by 52%.
• Helps you save money for your current other needs.
• Improves your credit rating.
How does a federal student loan consolidation scheme work?
A fixed-rate refinancing program, federal student loan consolidation lumps together all your federal student loans to make a single new loan. Federal student loan consolidation manages all your loans, winnows out those constant payment worries, and enables you to concentrate on your studies.
Furthermore, you can maneuver the consolidated loan according to your affordability and viability. You can carve out the time duration you would need for repaying the consolidated loan. Based on the amount you owe for your education debts, you can repay the money in ten years or extend this period to even thirty years.
Of course, if you opt for a longer duration, you will have to pay more, but the loan would not be that much of an encumbrance on you. With low monthly payments, you can easily manage it all without getting cramped for money that you need for your other living and housing expenses.
Interest Rate
Student loan consolidation interest rate is a fixed rate equal to a weighted average of the interest rates on your existing loans, rounded up to the nearest one-eighth of one percent. Usually, there are no discounts on the payments; however, you can enquire about time based discounts. Besides, for a student loan consolidation, you don’t have to pay any penalties for early repayment. In fact, early repayments are interest-free.
No Non-federal loans with Federal student loan
Some students have a mistaken belief that they can combine any type of non-federal loan (such as car loans, home loans, mortgages, and private loans) with a federal student loan. This is wrong. Federal student loan consolidation will include only the federal education loans.
With a view to providing every eligible student with a chance to pursue higher education, US Government backs a student via federal student loans. If a student fails to repay the loan amount, the government pays it. Thus, the lenders have no risk, for they know they will get their money back. Since, federal student loan pertains to education; you cannot combine other personal loans with a federal student loan while opting for a consolidation.
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