Repay Student Loans

If you are thinking about taking out student loans, look into the option of Direct Loans. Unlike private student loans, the lender of student direct loans is the U.S. Department of Education instead of a bank or other financial institution. These loans usually have lower rates.You borrow directly from the federal government and only need to contact on Direct Loan Servicing Center.

There’s no need to call different servicing centers even if you receive the loan at different schools. You will have online access to your Direct Loan account. Here comes the best part of these loans which is that you can choose from several repayment plans and you can switch repayment plans if your needs change. For example, if you lose your job and need to modify your repayment amount.

Source: US Department of Education

You are graduating, or you have graduated for 3 moths and yet there’s no sign of a full time job. You’re still hunting for that job and you’re losing sleep over the upcoming payment of your student loans. You are worried that someone from the lender will call you soon and you will receive a written notice.

Regardless what people tell you, there’s a Borrower Grace Period.
Here’s what it stands for: after you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment. This “grace period” will be

Source: studentaid.ed.gov

Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Academic Competitiveness Grants and National Science and Mathematics Access to Retain Talent Grant (National SMART Grants). Once a school notifies you that you must repay part of a grant, you will have 45 days to either pay that portion of the grant back in full or enter into a satisfactory repayment arrangement with the school. If you do not carry out one of these options, you will lose your eligibility for further Title IV Federal financial aid, and the school will assign the overpayment debt to the U.S. Department of Education (Department) for collection.If you choose to enter into a satisfactory repayment arrangement, the school may assign the debt to the Department for collection or may keep the debt and allow you to make payments directly to them.

Teacher Education Assistance for College and Higher Education (TEACH) Grants. Through the College Cost Reduction and Access Act of 2007, Congress created the TEACH Grant Program that provides grants of up to $4,000 per year to students who intend to teach in a public or private elementary or secondary school that serves students from low-income families. If you have been awarded a TEACH Grant, and then it is determined that all or a portion of your grant(s) has been over-awarded, the amount declared an overpayment will be assigned to the Department for collection.

You may restore your eligibility for Title IV Federal financial aid by entering into an acceptable repayment plan with the Department. As long as you make the payments as agreed the grant-originated debt will not affect your eligibility for further aid. However, if you fail to make the agreed-upon payments, your eligibility will be permanently lost until the debt is paid in full.

Grant overpayment debts are not eligible for either consolidation or rehabilitation.

Source: US Department of Education

Unlike loans, grants do not usually have to be repaid. However, there are two reasons why you may have to repay part of a Federal grant:

1) The amount given to you was more than you were eligible to receive (this is called an over-award). This can happen if the school makes an error when calculating your eligibility for financial aid, or if an audit of your financial records reveals that some of the information you provided was incorrect (for example, your income was higher than what you reported on your application for financial aid).

2) You withdrew early from the program for which the grant was given to you.

Source: US Education Department

By Michael Wai W

By Richard Shelmerdine

Article by: Sarah Russell

If you’ve recently graduated from college, you’ve probably been bombarded with mailings and advertisements urging you to refinance (or consolidate) your student loans right away. But wait, what is loan consolidation? And why should you do it?

If you’ve just graduated from college, you’ve probably got a number of different student loans, all in different amounts from different lenders at different interest rates. Loan consolidators (which can be private banks, lenders or government agencies) pay off all your individual loans in exchange for a single loan in the same amount issued to you. So now instead of all those different loans, you’ve got one loan that you repay to the consolidator.

Refinancing your student loans reduces your monthly payments and locks in a fixed interest rate. In most cases, student loans have variable interest rates set a few points below prime. As interest rates go up, so will the interest rate on your loans. When you refinance your loans, you lock in an interest rate based on the current market conditions that will be set for the life of your loan. Therefore, it’s important to evaluate the market before making the decision to consolidate. Right now, interest rates are low, but they’re going up and most economists predict that they’ll continue to go up for awhile. So for many people, this is a good time to refinance.

Your credit history will also determine your eligibility for loan consolidation programs. Loan consolidators can be picky in who they accept for their programs, so the option to refinance is usually only available to individuals who have established good credit by paying their loans back on time. If you’ve missed payments or made payments consistently late, you may not be offered the best terms, if you’re accepted at all. If your application is denied the first time, call the consolidator and talk to a loan officer about the reason for your rejection. The officer may offer you advice on how to qualify for their program at a later date.

If you decide to refinance, be sure to consolidate federal loans and private loans separately from each other. When you consolidate your loans, you’re typically offered a rate that’s 1-2% lower than the average rate of your loans. Federal student loans often carry much lower interest rates than private loans, so consolidating them together can bring up the average interest rate of your loans and leave you with a higher fixed rate locked in. If you only have one private loan, it may not make a difference, but it’s important to assess your options before committing to refinance.

Is there anyone who shouldn’t consolidate? Let’s look at a scenario. Tracy has 2 loans for $5,000 each that are scheduled to be paid off within 5 years. She can afford to make her monthly payments but wants to see if she can save a little extra cash each month by consolidating. She finds out that she can refinance the loans into a $10,000 consolidation loan to lower her monthly payments and she’ll be eligible to extend her payments over 8 years. But because she’s extended the life of her loans, she’ll be paying interest over a longer period of time and may wind up paying more overall than if she had kept her loans as they were.

It is tempting to pay less per month but if you can afford to pay off your loans in a shorter period of time, then you’ll likely save money on interest in the long run. Obviously every situation is different and you won’t find all your answers in a short article like this. But if you think loan consolidation might be right for you, check out the Student Loan Network’s site at Studentloanconsolidator.com for more information or speak with a loan officer or financial planner to see what your options are.

About The Author

This article was published by Sarah Russell on Smart Young Money – a collection of money management resources for teens and young adults. For great information on using credit, managing debt and more for young people, visit http://www.smartyoungmoney.com.

Article by Roger Guzman, M.D.

Private student loan consolidation cannot be generally mixed with federal student loans due to the low interest rate on the latter. However, there are several options open to refinance the private student loans by replacing them with another.

The main advantage of doing this is that instead of making several monthly payments, only a single payment is made every month that may be reduced although this will cost one in terms of higher interest amount paid because the single loan may be for a longer period of time.

There is a way to secure a lower interest rate. The private student loan is based on the credit score. If the credit score has improved by 50 to 100 points due to the fact that you have graduated and have a job, then you will be rewarded with a low interest rate.

Another way of getting a better deal when considering a private student loan consolidation is to talk to the holders of your debts. They may be willing to negotiate with you and cut down your interest rate so that they can keep you as their customer.

This type of loan also incurs the same interest that the home equity loan has. You can have a home equity loan at a fixed rate, thus locking in the low interest rate. However sometimes a variable rate looks attractive as long as you can watch it and lock it the moment it is on an upward trend.

Study carefully the terms of the agreement. Find out if the interest rate is variable or fixed. Ask also about fees and if there are prepayment penalties. Find out how much they are for each of the following lenders. Write them down so you can get the best deal from among the following list and whatever other companies willing to do the private student consolidation loan with you:

Key Education Consolidation Loan – $75,000 maximum for non-key debt, $7500 minimum, 10, 15, 30 year repayment term, no prepayment penalty and no fees

Citi Student Loans – $75,000 maximum, $7500 minimum, choose fixed or variable rate, up to 30 year term rate, rate reduction after 48 monthly on time payments, no prepayment penalty

Study carefully the terms of the agreement. Find out if the interest rate is variable or fixed. Ask also about fees and if there are prepayment penalties. Find out how much they are for each of the following lenders. Write them down so you can get the best deal from among the following list and whatever other companies willing to do the private student consolidation loan with you:

Key Education Consolidation Loan – $75,000 maximum for non-key debt, $7500 minimum, 10, 15, 30 year repayment term, no prepayment penalty and no fees

Citi Student Loans – $75,000 maximum, $7500 minimum, choose fixed or variable rate, up to 30 year term rate, rate reduction after 48 monthly on time payments, no prepayment penalty

Study carefully the terms of the agreement. Find out if the interest rate is variable or fixed. Ask also about fees and if there are prepayment penalties. Find out how much they are for each of the following lenders. Write them down so you can get the best deal from among the following list and whatever other companies willing to do the private student consolidation loan with you:

Key Education Consolidation Loan – $75,000 maximum for non-key debt, $7500 minimum, 10, 15, 30 year repayment term, no prepayment penalty and no fees

Citi Student Loans – $75,000 maximum, $7500 minimum, choose fixed or variable rate, up to 30 year term rate, rate reduction after 48 monthly on time payments, no prepayment penalty

Educated Borrower Private Consolidation Loan – $300,000 maximum, $7500 minimum, up to 30 year repayment term, no prepayment penalty and 0 to 5% origination fees

Sallie Mae Private Consolidation Loan – $275,000 maximum, $5000 minimum, 15 to 30 year repayment term, choose between fixed and variable rate, no prepayment penalty and no fees

SC Student Loan – PAL Consolidation Loan – $150,000 maximum, $5000 minimum, 10 to 30 year repayment term, choose between fixed and variable rate, no prepayment penalty and no fees

Next Student Private Consolidation Loan – $300,000 maximum, $7500 minimum, up to 30 year repayment term, no prepayment penalty and 0 to 5% origination fees

Make sure when you are considering to go this route that you clarify all the terms of the agreement as the above may have changed and that all are put in writing and signed by both parties. The best one is the one that fits your needs. There you have some of the possible lenders and the other options when considering to do the private student loan consolidation.

About The Author
Brief Biography: Dr. Guzman worked for the Atlantic Health Corporation and was consultant to St. Joseph’s Hospital, Sussex Mental Health Clinic, and St. Stephen Mental Health Clinic for many years. He was Director of Forensic Psychiatry at Centracare for ten years and published numerous articles, including financial ones in the Journal of the American College of Forensic Psychiatry and other medical magazines.

Copyright © May 28, 2009 Roger Guzman, M.D. (Private Student Loan Consolidation, Is There a Best One?) All Rights Reserved. You may copy and publish this article as long as the text, the author’s name, the active links and this notice remain the same. http://www.debtchallenges.com/

The Direct Consolidation Loan Program offers four repayment plans with various term selections:

• Standard Repayment Plan – Under this plan, you will pay a fixed amount of at least $50 each month for up to 10 to 30 years, based on your total education indebtedness. This plan may result in lower total interest paid when compared to repayment under one of the graduated plans.If you have not selected a repayment plan by the time repayment begins, your loan(s) will be placed on the Standard Repayment Plan.
• Graduated Repayment Plan – Under this plan, you will pay a minimum payment amount at least equal to the amount of interest accrued monthly for up to 10 to 30 years, based on your total education indebtedness. Your payments start out low, and then increase every two years. Generally, the amount you will repay over the term of your loan will be higher under the Consolidation Graduated Repayment Plan than under the Consolidation Standard Repayment Plan. This plan may be beneficial if your income is low now but is likely to steadily increase.
• Extended Repayment Plan – To qualify for this plan, your Direct Loan balance must be greater than $30,000, and you will have up to 25 years to repay your loan(s). Plan options include:
  • Fixed Monthly Payment Option – You will pay a fixed amount of at least $50 each month for up to 25 years. Repayment under this plan will result in lower total interest paid when compared to graduated plans with similar terms.
  • Graduated Monthly Payment Option – You will pay a minimum payment amount of at least $50 or the amount of interest accrued monthly, whichever is greater, for up to 25 years. Your payments start out low and then increase every two years. Repayment under this plan may provide lower initial monthly payments, although the total interest paid may be greater when compared to plans with similar terms with fixed payments. This plan may be beneficial if your income is low now but is likely to steadily increase.

  **Extended repayment terms are available to Direct Loan borrower with no outstanding principal or interest balances as of October 7, 1998 and with more than $30,000 in Direct Loans.

• Income Contingent Repayment (ICR) Plan – payment amount is based on your income (and your spouse’s income, if you are married), loan balance and family size, and can vary year-to-year for up to 25 years.

Source: U.S Department of Education

After you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment. This “grace period” will be

* six months for a Federal (FFEL) or Direct Stafford Loan.
* nine months for Federal Perkins Loans

The repayment period for all PLUS loans begins on the date the loan is fully disbursed, and the first payment is due within 60 days of the final disbursement. However, a graduate student PLUS loan borrower (as well as a parent PLUS borrower who is also a student) can defer repayment while the borrower is enrolled at least half time, and, for PLUS loans first disbursed on or after July 1, 2008, for an additional six months after the borrower is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower.

Parent PLUS loan borrowers whose loans were first disbursed on or after July 1, 2008, may choose to have repayment deferred while the student for whom the parent borrowed is enrolled at least half-time and for an additional six months after that student is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower.

Source: U.S. Department of Education