Repay Student Loans » Student Loan Consolidation

Consolidate Private Student Loans

admin — Thu, 18 Jun 2009 20:32:00 +0000

By Michael Wai W

Just to let you know, you are not the only graduate who has to deal with multiple private student loans. It is difficult to manage your financial condition with multiple loans on your back and other expenses to take care of. How can you remedy the situation? Have you ever thought of going to consolidate your private student loans?

When you are doing so, there are 3 things you need to look out for.

1. Loan consolidator

Unlike federal student loan consolidation, private loan consolidators charge various interest rates for your loans. The interest rate charged is according to the market rate. So, when the market rate is low, you can enjoy low interest rate. But when the market rate shoots up to the maximum cap, you will have to bear the burden.

And to get your business, different loan consolidators will offer different benefits when you consolidate your student loans with them. Some of them may offer higher interest rate but they might offer lucrative packages that can benefit you in the long run and vice versa. So, you have to look into your need before you talk to the loan consolidators.

Lastly, you have to be extra careful when you are applying for online private student loan consolidation. This is because there are a lot of agencies which claim to consolidate your loans are actually referring your loans to firms that really consolidate student loans. You can actually get better interest rate when you deal directly with the responsible firms.

2. Extra cost and penalties

When you are consolidating your private student loan, you will also want to be clear of the extra cost that is involve in your consolidated loan. Some loan consolidators might charge you for an application fee and some might charge you processing fee for credit history check.

And to let you know, many loan consolidators are withdrawing their pre-payment penalty (penalty that you need to pay when you settle your loan before the agreed loan period). So, be sure that you ask the loan consolidators about this and if they are unwilling to withdraw this for you, you can always look for another loan agency.

Although you can enjoy incentive with on-time payment, what if you are late with your monthly payment? How much penalties are they going to charge you? You have to be clear on every detail of your loan consolidation.

3. Promotions

And since the loan consolidators are competing for your business, it is common that they will run promotions once in a while to draw in new business. So, when you are talking to the loan agencies, remember to ask them about the promotions. It will be good to have some incentive to lighten your burden.

Sometime the loan agency will not inform you about the promotions. After all, they are affecting their profit when they run the promotions. So, you have to take the initiative and keep yourself update so that you can get on the boat before the expiry date.

To learn much more about student loan consolidation, visit StudentLoanConsolidationHowTo.blogspot.com where you will find this and much more including student loan consolidation comparison.

Article Source: EzineArticles.com

Federal education loans that are eligible for consolidation into a Direct Consolidation Loan

admin — Wed, 29 Apr 2009 17:30:14 +0000

The following federal education loans are eligible for consolidation into a Direct Consolidation Loan:

Direct Subsidized and Unsubsidized Loans
Federal Subsidized and Unsubsidized Stafford Loans
Direct PLUS Loans and Federal PLUS Loans
Direct Consolidation Loans and Federal Consolidation Loans
Guaranteed Student Loans
Federal Insured Student Loans
Supplemental Loans for Students
Auxiliary Loans to Assist Students
Federal Perkins Loans
National Direct Student Loans
National Defense Student Loans
Health Education Assistance Loans
Health Professions Student Loans
Loans for Disadvantaged Students
Nursing Student Loans

Can I Consolidate a Defaulted Loan?

admin — Wed, 22 Apr 2009 19:04:44 +0000

Generally, Federal education loan(s) in default may be consolidated in a Direct Consolidation Loan if borrowers:

* Agree to repay the loan(s) under the Income Contingent Repayment Plan.
OR

* Make satisfactory repayment arrangements with the current loan holder(s).

If, before applying for consolidation, borrowers who want to completely clear the default notation from their credit records, they may want to consider another option: loan rehabilitation. Borrowers should contact their loan holders to obtain more information about this option.

Borrowers cannot consolidate defaulted loans under these conditions:

* If a judgment has been issued against a defaulted loan, it cannot be included in the consolidation unless the judgment order has been vacated (dismissed).
* If they are trying to consolidate defaulted Direct Consolidation Loans.
* If they are trying to consolidate defaulted FFEL Consolidation Loans unless they have made satisfactory repayment arrangements with their current loan holder OR the borrowers agree to repay under the Income Contingent Repayment Plan.
* If they are trying to consolidate defaulted Perkins or health professions loans unless they have made satisfactory repayment arrangements with their current loan holders.

Source: U.S. Department of Education

Can I consolidate an existing consolidation loan?

admin — Wed, 22 Apr 2009 18:57:09 +0000

Yes, under three conditions:

Borrowers can consolidate existing consolidation loans into a new Direct Consolidation Loan if they include at least one other FFEL or Direct Loan into the new consolidation loan.
Borrowers can consolidate a single Federal Consolidation Loan if the loan is in default status or has been submitted to a guaranty agency for default aversion by the loan holder.
Borrowers can consolidate a single Federal Consolidation Loan if they intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program.
Borrowers who have only a Direct Consolidation Loan cannot consolidate again unless they include an additional loan.

Source: U.S. Department of Education

About Loan Consolidation

admin — Wed, 22 Apr 2009 18:45:15 +0000

Consolidation loans allow you to combine different types of federal student loans to simplify repayment. Even if you have just one loan, you can also choose to consolidate it. Both the FFEL and Direct Loan Programs offer consolidation loans. There are several advantages to consolidate or rehabilitate your loan as described in the categories below.

FFEL Consolidation Loans

A FFEL Consolidation Loan is designed to help student and parent borrowers consolidate several types of federal student loans with various repayment schedules into one loan. With a FFEL Consolidation Loan, you will make only one payment a month. Under this program, your consolidation loan will be made by a commercial lender, credit bureaus will be notified that your account has a zero balance, and you will sign a new promissory note that will establish a new interest rate and repayment schedule. To receive a FFEL Consolidation Loan, you must be in repayment on your defaulted loan (that is, three voluntary, on-time, full monthly payments). Depending on the balance due, the repayment period may extend up to 30 years. If you owe no other delinquent or defaulted debts to the United States, you will again be eligible for other federal funds, including FHA loans, VA loans, and Title IV student financial aid funds.

Source: U.S. Department of Education

FFEL and Direct Stafford Loan Consolidate Eligibility

admin — Wed, 22 Apr 2009 18:37:21 +0000

All FFEL and Direct Stafford Loan borrowers are eligible to consolidate after they graduate, leave school, or drop below half-time enrollment.

PLUS loans are eligible for consolidation once they are fully disbursed.

Borrowers who are delinquent or in default must meet certain requirements before they may consolidate their loans. Contact your loan holder for more information.

Eligibility Requirements:

To qualify for a Direct Consolidation Loan, borrowers must have at least one Direct Loan or Federal Family Education Loan (FFEL) that is in grace, repayment, deferment or default status. Loans that are in an in-school status cannot be included in a Direct Consolidation Loan.

Borrowers can consolidate most defaulted education loans, if they make satisfactory repayment arrangements with the current loan holders or agree to repay their new Direct Consolidation Loan under the Income Contingent Repayment Plan.

Borrowers who do not have Direct Loans may be eligible for a Direct Consolidation Loan if they include at least one FFEL Loan and have been unable to obtain a Federal Consolidation Loan with a FFEL consolidation lender or have been unable to obtain a Federal Consolidation Loan with income-sensitive repayment terms acceptable to them or intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program.

Borrowers who have only a Direct Consolidation Loan cannot consolidate again unless they include an additional loan.

Source: U.S. Department of Education

Obtaining a Consolidation Loan

admin — Wed, 22 Apr 2009 18:33:57 +0000

For a FFEL Consolidation Loan, contact the consolidation department of a participating lender for an application or more information. (Your parents should do the same thing if they want to apply for a FFEL PLUS Consolidation Loan.)

For Direct Loans, you (and your parents, for a Direct PLUS Consolidation Loan) can contact the Direct Loan Origination Center’s Consolidation Department.

Note that if your parents want to apply for a FFEL PLUS Consolidation Loan, no credit checks are required. If they want to apply for a Direct PLUS Consolidation Loan, they are subject to a check for adverse credit history.

Source: Department of Education

Who is eligible for a Direct Consolidation Loan?

admin — Wed, 22 Apr 2009 18:25:50 +0000

To qualify for Direct Consolidation Loans, borrowers must have at least one Direct Loan or Federal Family Education Loan (FFEL) that is in grace, repayment, deferment, or default status. Loans that are in an in-school status cannot be included in a Direct Consolidation Loan.

Borrowers can consolidate most defaulted education loans, if they make satisfactory repayment arrangements with their current loan holder(s) or agree to repay their new Direct Consolidation Loan under the Income Contingent Repayment Plan.

Borrowers who have only a Direct Consolidation Loan cannot consolidate again unless they include an additional loan.

Source: U.S. Department of Education

You Should Always Consider the Cost of Student Loan Consolidation

admin — Wed, 22 Apr 2009 18:22:13 +0000

You should keep in mind that although consolidation can simplify loan repayment and lower your monthly payment, it also can significantly increase the total cost of repaying your loans. Consolidation offers lower monthly payments by giving borrowers up to 30 years to repay their loans. So, you’ll make more payments and pay more in interest. In fact, in some situations consolidation can double your total interest expense.

If you don’t need monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidation loan. You also should take into account the impact of losing any borrower benefits offered under non-consolidated repayment plans. Borrower benefits, which may include interest rate discounts, principal rebates, or some loan cancellation benefits can significantly reduce the cost of repaying your loans.

Once made, Federal Consolidation Loans cannot be unmade. That’s because the loans that were consolidated have been paid off and no longer exist. Take the time to study your consolidation options before you submit your application. This checklist has been designed to help you determine whether and how you should consolidate your loans.

Source: U.S. Department of Education

Special Considerations for Consolidation of Federal Loans

admin — Wed, 22 Apr 2009 18:17:48 +0000

Student loan consolidation is combining several loans into one with a new repayment term and interest rate. This is generally offered in connection with federal loans. Here’s how to help identify potential problems related to loan consolidation:

Avoid lenders and marketers who use high-pressure sales tactics. Some marketers pitch that “your interest rates may go up if you do not consolidate immediately!” Whether and when interest rates for consolidating your loans will change depends on what type of loans you have. Look at your loan documents to determine whether the interest rates are fixed or variable:

If all of your education loans have fixed interest rates, there may be no deadline to consolidate.
If some or all of your loans have variable interest rates, when you consolidate into a fixed loan it may affect the interest rate of your loan. ED publishes new variable rates for some federal loans each July 1st. The annual rate changes can raise or lower the interest rate offered on a consolidated loan because the consolidation interest rate will be the weighted average of all loans consolidated.

Whether or not you have a targeted timeframe, take your time to determine whether consolidating is right for you.

Some lenders impose restrictions on promised discounts. Some may disclose these limits only in the fine print. Read the fine print in your loan documents to find these types of conditions:
Some lenders lower the interest rate on your consolidated loan, but only if you opt for automated payments from your checking account.

Other lenders discount the interest rate on your consolidated loan, but only if your loan has at least a specified minimum loan balance.

Still others agree to lower the interest rate on your consolidated loan, but only if you remain current on your payments for the life of the loan. You may want to consider loans with more immediate discounts, a shorter on-time payment period for interest rate discounts, or an additional discount for signing up for automatic payments.

Some lenders sell consolidated loans to other companies. Because benefits of consolidated loans — like promised discounts — may not transfer, you may lose benefits if the lender sells your loan. Ask the lender whether the terms of your loan will change if it is sold.

Be cautious about consolidating federal loans and private loans into one private loan. The result of consolidating all loans into one non-federal private loan means that you lose all the benefits and protections provided in the federal loan programs.

Consolidating a Perkins loan may not be in your best interest. You may lose unique deferment and cancellation rights available to Perkins loan borrowers. For more information about these rights go to http://www.ed.gov/off ices/OSFAP/DCS/perkins.deferment.cancellation.html.
Frequent consolidation after borrowing may impact timelines you need to meet to qualify for these benefits.