Federal Loan Consolidation May Not Benefit All Student Borrowers

Federal loan consolidation is an option that may help borrowers manage repayment of their federal student loans, particularly if they still have Federal Stafford/Direct Loans with variable interest rates. But, consolidation may not be right for all borrowers, particularly for those who now only have federal student loans with fixed interest rates. According to Jeffrey E. Hanson, director of borrower education services at Access Group, a nonprofit student loan provider, "Borrowers may be able to save money both in terms of their monthly loan payment and in the total amount they pay if they do not consolidate their fixed rate Federal Stafford/Direct and Federal PLUS loans."
There are three primary reasons why borrowers should weigh the benefits and costs before rushing into consolidation. First, Federal Stafford/Direct Loans first disbursed on or after July 1, 2006, have fixed interest rates. Thus, the fixed interest rate structure of the Federal Consolidation Loan provides no advantage to borrowers who have these new fixed rate loans. Second, many graduate/professional student borrowers likely now qualify for the Extended Repayment option on their Federal Stafford/Direct and Federal PLUS loans. That option provides a 25-year repayment period, thereby allowing borrowers to reduce their monthly loan payment without having to consolidate. And most importantly, many lenders now offer on-time payment incentives on Federal Stafford and Federal PLUS Loans that are more beneficial financially than those offered on consolidation loans.
To see examples illustrating how borrowers can save money by not consolidating and to learn more about the pros and cons of the Federal Consolidation Loan program, go to FederalConsolidation.Org

Federal Family Education Loan Program

There are many universities across the US that help graduate students to get loans to pay for their studies. The government has also instituted federal loan programs that the universities can help their students get. One such university is Santa Clara University.
The Federal Family Education Loan Program (FFELP) is also known as Stafford Loan Program and it is supported by the government. It was set up to meet the cost of education of graduate students and law students. Santa Clara University, in partnership with Bank of America and Edfund, has the program. Under this program the university acts as the initial lender, Edfund is the guaranteeing agency, while the Bank of America gives out the loans or purchases them.
Under the Stafford Loan program, a student can go for two types of loans.
Subsidized loan: In this type of loan, the federal government pays the interest on the loans while the borrower is still in school at least half time and during grace periods and deferments. The borrower has to prove that he requires financial help in order to be eligible for a subsidized loan.
Unsubsidized Loan: The federal government does not pay the interest on these loans while the borrower is in school, in a grace period or in deferment. Immaterial of the financial status of the student, this loan can be availed.
The maximum loan amount that can be borrowed during a year of graduate study is $18,500. All FFELP loans have an origination fee of 3 percent which is deducted proportionately when the loan is being disbursed. The federal government uses this fee to reduce the cost of supporting these low interest loans.
First time borrowers are required to complete an entrance counseling session online before the money can be credited to the tuition account. Once the entrance counseling and promissory notes requirements have been completed, the loan amount will be credited into the borrower’s account.

Organize Your Finances Through Student Loan Consolidation

Before you decide to opt for a student loan consolidation program, let us try to understand the types of Student Loans available.
Federal Loans
This loan is sanctioned by the U.S. education authorities and is usually approved easily. Here are the different types of Federal loans that are eligible for student debt consolidation. However, they can be widely categorized under
Federal Perkins Loans
Stafford Loans
PLUS Loans
Features
Federal Loans are tax deductible thereby giving you the advantage of increased cash in hand.
These loans offer the facility of deferred payments incase you decide to become a student again.
Federal Loans “might” be excused in extraordinary circumstances.
Federal loans come with a guarantee or reliability of the US government.
Private Loans
Private loans are those that are offered by private banking institutions or specialized student loan consolidation companies for the purpose of education. The interest rates are high. It is advised that students refrain from taking these loans unless necessary. Credit history plays an important role here. If the student or his family has a poor credit rating score, the chances of getting a good deal are slim. Moreover, the interest rates and the fees are very high. In some cases 10 times higher than that charged by the Federal loan providers! Besides, unlike the federal loans, in private student loans, you will not get any tax relief.
Criteria for Student Debt Consolidation
Not every loan is eligible for federal loan consolidation. Here are some of the main criteria for eligibility
The borrower must be out of school or college
The federal loan repayment must have started or be in its grace period.
The consolidated loan amount should ideally be above $10,000.
Advantages of Federal Loan Consolidation
Always remember to keep federal and private loans separate. Consolidate all federal loans into one program and all the private loans into another. The main advantage of student federal loan consolidation is,
Multiple loans are being merged into one.
You are free from keeping a track of all the due dates and the corresponding installments.
The consolidated monthly payment is considerably less than that what you would have paid otherwise. In some cases, you can save up to 45%!
You get to show an improved credit rating as you have just one loan and one creditor to take care of.
On choosing the best student debt consolidation program, you are paying less every month. You have more cash at your disposal
You can stretch the repayment over a period of 30 years!
Whatever may be your choice, student loan consolidation or individual payments, always remember that committing to a loan is a serious matter. Only take what you can give back!
Student loan debt consolidation is a good option if you are faced with a situation of unmanageable student loans. Student Loans Debt Consolidation offers you insight and valuable information about the process of student debt consolidation and federal loan consolidation.

Bad Credit Student Loans

Many students finish their education with loans still remaining to be paid off. They, therefore, end up with bad credit, and often with no credit at all. These students can avail of special bad credit student loans granted by the federal government. The interest rates on federal bad credit student loans are significantly low compared to that of personal loans and home equity loans. Bad credit student loans are also available from private lenders. However, their interest rates are generally slightly higher.
There are different kinds of bad credit student loans granted by the federal government. The federal Stafford loan is granted directly to the students. The interest rate is kept low, usually below 8.25%. There is a deferred period for repayment. Students can begin their repayments six months after the completion of their studies. If a student applies for subsidized Stafford loan, the interest amount is paid by the government during the deferred period. If the student has taken unsubsidized Stafford loan, he himself has to pay the interest amount during the deferred period. Another kind of federal student loan is the PLUS (parent loans for undergraduate students) loans. These loans are paid to the parents on behalf of their children. In case the parents cannot qualify for the loans, a qualifying co-signer can come in handy.
The federal government has a provision to grant bad credit student loans through the college. The federal Perkins loan is funded jointly by the college and the government. The interest rate is usually maintained at about 5%. The repayments have to be made to the college.
Bad credit student loans are granted to help students continue with their higher studies. Additionally, the students get a second chance to rebuild their credit ratings. Regular repayment assures an increased the credit rating.

Defaulted Student Loans

Once you have left school and your federal student loans are in repayment it is important to make your payments on time. Some students and parents get behind on their Stafford loan, PLUS loan or Graduate PLUS loan payments, feel overwhelmed, and before you know it you haven’t made a payment in 270 days and your loans have gone into default. Your lender must make an aggressive effort to collect but if that fails your loan is turned over to the guarantor. Now it starts getting expensive.
The guarantor has several options at their disposal for collecting your loan payments• US treasury offset – your federal and state income tax refunds may be garnished.• Turn the loan over top a professional collection agency – fees and penalties may be up to 25% of the total principal and interest due.• Wage garnishment – your paycheck may be garnished for up to 15% of your disposable income.• Legal action – you can be sued for the balance of the loan plus court costs and lawyers fees.• Credit agencies notified – a defaulted loan stays on your credit report for a minimum of 7 years.
Other penalties when your Stafford, PLUS or Graduate PLUS loans enter default:• You lose any deferral and forbearance rights• You cannot receive any further federal aid• Generally your loan is due in full upon defaulting
Even if you pay your federal loan off it will still be noted as defaulted, paid in full on your credit report and counted as a black mark.
Defaulting on your federal loan must be avoided if at all possible. If you are having trouble making your payments contact your lender, they may be able to help you work out a payment plan you can afford. Consolidation may be your best option in the long run, it lengthens the term of your loan which lowers the payments and has several repayment plans to fit anyone’s budget. Contact Federal Education Services about a Stafford, PLUS or Graduate PLUS loan consolidation before you slip into the default abyss

Direct Loans 101

By John Williams

Direct loans are convenient, flexible and simple. A Direct loan is a loan by a lender to a customer without the use of a third party. This type of loan enables the lender to have greater discretion in the distribution of loans. Typically the lender is the U.S. Department of Education rather than a bank or financial institution. The federal government provides four types of direct loan financing.
These direct loans vary in criteria and repayment schedules:
• The Federal Direct Subsidized Stafford/Ford Loan is a direct loan, which means you do not pay the interest on the loan while you are school at least part-time. This particular type of Direct loan is based on the student financial need in accord with federal regulations.
• The Federal Direct Unsubsidized Stafford/Ford Loan is a direct loan the government charges you interest while you are in school. The student does not need to be in extreme financial need to receive this type of loan.
• The Federal Direct PLUS loan is a direct loan designed for parents without an adverse financial history who wish to borrow money for their dependent student. In order for a student to be dependent he or she may not be 24 years or older, a graduate or professional student, someone with legal dependents, an orphan or a ward of the court. Parents of independent students are not eligible to apply for this type of loan.
• The Federal Direct Consolidation loan is a consolidation of one or more federal loans combined into a direct loan. A single monthly payment is made to the U.S. Department of Education. It is to the student’s advantage to consolidate, due to lower interest rates.
Direct loans give you the simplicity of having one contact for concerns with your financial assistance. You are able to have access to your Direct loan information on-line 24 hours a day, 7 days a week. You are given the flexibility to choose your repayment options and are able to change your schedule as your needs change.

What About Your College Loan Consolidation

Now that you have graduated from college, one of the most nagging prioritises for you is to settle your student days loans, whether private or Federal college loan. So how nice would you feel to note that you have a constitutional right to lawfully reduce your student loans liability by as much as 60%.
Federal Loan Consolidation:
You can use the Federal college Loan Consolidation Program to make your student loan repayment more manageable. Yes, this program allows you to bundle your existing variable-rate federal loans into a single, fixed-rate loan of unprecedented rates as low as 4.5%.
Best of all is that it is free to consolidate, and there are reputable online private firms that make it even easier with fast, online applications plus, you get Education Finance Advisors who can answer your questions and help you through the loan consolidation process for better college student loan consolidation.
College loan Consolidation Drawback And Best College Consolidation Loan:
Even if you have already consolidated your Federal Loans at a higher rate than 4.5% or you are still carrying your private loans and would like to refinance them, there are also reputable firms you can use to get better deals in spite of college loan consolidation drawback. You can even lump all your loans, both private and Federal, into one single loan portfolio and get even lower rates.
Even if you want to continue your education, you will find loan organizations specializing in helping graduate students and continuing education students. You can even deduct already paid interest on Federal Student Consolidation loans.

Student Loan Consolidation Centers

A student loan consolidation centre allows you to combine several types of federal student loans with various repayment schedules into one loan with one monthly repayment.
It is best to search for loan consolidation centers which offer minimal rates of interest. A student is qualified for a maximum of 1 percent reduction on the interest rate, if he pays on time for thirty six consecutive payments. While still attending school, students having federal direct loans are able to consolidate by means of the federal consolidation program provided by the government.
Most student consolidation loans fall into two categories. They are government student loans and private student loans. Student consolidation loan centers provide loans such as federal, Stafford, professional student loans, nursing student loans etc.
The government loan consolidation centre is providing a student loan consolidation program which allows students to consolidate outstanding education loans into a single new loan. This is not limited to a single lender. Even if multiple lenders hold the loans, one can still opt to consolidate. Two popular online student consolidation loan centers are Internet student loans centre and US student loan consolidation centre. Next student is another popular student loan consolidating centre. It is offering student loan payments lower by up to 60% or more. Sallie Mae loan consolidation centre offers federal consolidation loans. The Citibank student loan corporation is giving federal and private loan consolidation. Wachovia consolidating loan centre is giving federal Stafford loans.
Students must only consolidate loans which are of variable or changing rates such as the Stafford Loans. Never consolidate on fixed-rate loans such as Perkins loans as there won?t be any financial benefit. Interest rates for college students who are already adults or on their way to sixth month grace period will be higher.
College Loan Consolidation provides detailed information on College Loan Consolidation, Private College Consolidation Loans, Best College Loan Consolidations, Federal College Loan Consolidations and more. College Loan Consolidation is affiliated with Student Loan Debt Consolidation.

Federal Student Loan Consolidation – Key Facts You Need To Know

By Dean Shainin

If you have federal loans, you can lower your monthly payments and reduce your interest rates, and make some savings with the Federal Consolidation Loan program.

What Are The Benefits Of Consolidating Your Student Loan?
Federal Student Loans enable you to consolidate your different types of student loans you acquired into one loan which is easy to maintain. With a Federal student loan consolidation, you can get interest rates that are fixed for the whole duration of your loan.

What Would Be The Disadvantages Of Acquiring A Consolidated Student Loan?
This depends on how you manage your loan. If you prolong the time it takes you to pay your loan, then you will end up paying more during the course of your whole loan repayment.
One Loan Can Help You Pay Your Balance Off Faster

On the other hand, with a consolidated loan there are really no penalties in prepayment and if you continually pay the same amount of payments before actually consolidating your loans, the interest you will incur would not increase. This therefore means that you will be in a position to pay the student loan off faster than in a situation where you did not consolidate your loans.
Options Available For Consolidating Student Loans

FFEL consolidation loan is one option that is available if you are considering a consolidated federal student loan. With this loan program, you can borrow via multiple repayment schedules.
Through the FFEL loan consolidation program, you make only one payment each month. In the FFEL program, the student loan consolidation you will be acquiring will be made by a commercial lender, after which credit bureaus will tell you that you already have a zero balance in your account, after doing so you will then sign a fresh promissory note indicating that you will have a new interest rate and schedule of repayment. However, in order to avail of the FFEL student loan consolidation, you must currently be in repayment on the loan you defaulted or that you have been able to make at least three voluntary and on time full monthly payments.

Refinancing student loans is subject to the borrower’s financial situation. The United States Department of Education does not in any way allow any borrower to refinance a student loan consolidation. If a borrower has an additional federal loan that is not originally included in the loan consolidation, these debts may then be added and calculated again into another Federal Consolidation Loan.

When one avails of student loan consolidation, there are no fees or charges incurred. The United States Department of Education does not in any way make charges or collects any fees to any borrower who avails of the student loan consolidation.

Here is a list of the 8 student loans that are eligible to be consolidated under student federal student loan consolidation are as follows:
1. PERK - Federal Perkins Loans, formerly Nations Defense/National Direct Student Loans (NDSL)
2. PLUS - Federal PLUS (Parent) Loans
3. SCON - Subsidized Federal Consolidation Loans
4. UCON- Unsubsidized Federal Consolidation Loans
5. SLS - Federal Supplemental Loans for Students (formerly Auxiliary Loans to Assist Students (ALAS) and Student PLUS Loans)
6. SS - Subsidized Federal Stafford Loans & Guaranteed Student Loans (GSL)
7. DSS - Direct Subsidized Stafford Loans, DUS - Direct Unsubsidized Stafford Loans
8. DPLUS - Direct PLUS Loans, DUCON - Direct Unsubsidized Consolidation Loan, including Direct PLUS Consolidation Loans.
There are several advantages which one can get from student loan consolidation. Due to the fact that student loan consolidation is a federal program, a borrower is still entitled to avail of the same Federal benefits, namely deferment, tax-deductible interest and forbearance. In addition, the loan is guaranteed by the government.
Consolidating your student loan basically gives you several advantages, and can help you save some money.

Dean Shainin is a consultant specializing in student loan consolidation. Get valuable resources, tools, information and more articles on student loan consolidation, visit this site: http://www.studentloanconsolidationtips.com/

Federal Loan Consolidation Departments

By Jimmy Sturo

Federal loan consolidation departments provide consolidation services to students who seek loans for educational purposes. Consolidation is a refinancing program providing an opportunity for the individual to convert outstanding education loans held by various lenders into a single new loan with a single monthly payment.

This method of clearing up credit is a wonderful way to pay off the debt in full right now, while providing you with the crucial opportunity to pay off your loan to a new department with whom you have a fresh slate.

There are many federal loan consolidation departments in the United States. The US Department of Education offers a federal consolidation loan program called the William D. Ford Direct Consolidation loan program. In this program, the borrowers are allowed to apply for a loan consolidation provided an agreement is made to follow to the Income Contingency Repayment Plan (ICR).

The department of education offers loan consolidation services both online and on the telephone. The federal departments offer many loans such as the one under the Federal Family Education Loan (FFEL) program. For loan consolidation, you have to approach either the consolidation department of the lender or a federal education department.

If the borrower defaults on payments, then the consolidation department (Department of Education) reports this to the national credit bureaus. That causes damages to the borrower's credit rating, eventually inviting difficulties for the borrower to purchase a car or house. So the borrowers must keep in touch with the loan-servicing center so that billing statements do not go astray.

Federal Loan Consolidation provides detailed information on Federal Loan Consolidation, Federal Student Loan Consolidation, Federal Direct Loan Consolidation, Federal Loan Consolidation Departments and more.

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