National Student Loan Consolidation - 5 Tips

Student loan debt is the price many students pay for getting a great education at a fine higher educational institution. To be sure, attending college and graduate school can pay dividends for the rest of one's life: a good education can contribute to higher earnings potential, a wider network of friends, and a broad base of knowledge that can enrich one's life in innumerable ways.

That is why debt is something that students consciously choose to take on: nobody is forced to take out a student loan. Rather, most students who take out loans realize that this is their best opportunity to get the money they need to pay for college.

In fact, many students end up taking out multiple student loans during their undergraduate or graduate college careers. Sometimes, one loan is just not enough to fund one's education.

The Challenge Of Having Multiple Student Loans

The drawback to having multiple loans is the complexity of paying them back. Having multiple loans means having to make multiple monthly payments to different lenders. It means different interest terms (such as a mixture of variable and fixed-interest rate loans). And, in many cases, it involves having varying repayment schedules (e.g., some at 5 years, some at 10 years).

Consolidation Tips

That is where student loan consolidation comes in. By consolidating your student loans, you are essentially rolling all of your outstanding debt into one single loan. The new loan will have a single interest rate and a single repayment schedule.

Notably, loan consolidation allows grads to potentially lower their monthly payments. This is because the consolidation loan allows them to stretch out their payments over a longer period of time of, say, up to 30 years. Of course, doing so increases the cost of the loan itself since more total interest is paid. But, when payments are too high, sometimes consolidating is the most practical option.

If you are considering national student loan consolidation, here are 5 tips:

1. Decide If Consolidation Is Right For You

You should not consolidate your student loan if: your monthly payments are manageable, you don't mind making multiple payments to different lenders, you do not currently hold multiple loans, or you do not feel you can get a better interest rate through consolidation.

Otherwise, consolidation is likely right for you.

2. Determine How Much You Can Afford In Monthly Payments

You will want to start by having a close look at your current monthly expenses. Figure out how much you can realistically afford in student loan payments each month. Write this figure down - it will come in handy soon.

3. Figure Out Your Ideal Repayment Period

Now that you know what you can afford to pay, use an online loan calculator to plug in different repayment schedules of, for example, 15, 20, 25 and 30 years. See which one gives you the payments you are looking for.

4. Check Out Lenders' Terms And Conditions

Research and check the terms and conditions of at least 5 lenders.

5. Apply

Then, contact at least 3 of the lenders you researched and apply to each one for a consolidation loan. See which lender offers you the best terms, and you are on your way to lower monthly payments!

By consolidating over a longer repayment period, you will enjoy lower monthly payments and the simplicity that comes with only having to deal with a single lender.

The Benefits of a Federal Student Loan Consolidation Plan

By applying for a federal student loan consolidation plan, students can combine all their existing education loans into one loan program. It is not very difficult to apply for a federal student loan consolidation plan; however you need to clear that this is what you really want. Before getting into any kind of consolidated student loan program, it helps to understand the terms and conditions. A federal student loan consolidation plan is definitely worth it if you are looking at minimizing your monthly payments and easing your financial worries.

Once you make a call to the Direct Loan Servicing Center, that is a part of the U.S. Department of Education, you will be given your new federal student loan consolidation plan sooner than you expect. The process is fast and simple, making it convenient for students to start out with their new federal student loan consolidation program.

One of the main reasons why students consolidate their federal student loans is to simplify their finances and benefit from an extended loan repayment period. As and when you get started with your federal student loan consolidation plan, you will be dealing with a single education loan, instead of multiple. This will enable you to pay your monthly installments more efficiently and on-time as there won't be multiple due dates to keep track of. One of the greatest benefits of consolidated loan programs is that you can consolidate additional debt to fit into the loan depending on your requirements.

With the rising costs of education, many students are forced to take out multiple student loans to pay for college. In recent years, the cost of education has slowly risen; making it impossible for students to pay for college without some form of financial aid. Most students end up with multiple college loans, and this could turn into a huge hassle when repayment begins after graduation or if the student drops out. College loan refinancing attempts to simplify this problem. When students graduate, they will have several debts to pay; instead of having to make multiple repayments year after year, getting into a single consolidated loan program can make your life easier.

Most students graduate and head on to their career of choice. For most, the starting salary may not be all that high, and by the time they are done with their multiple loan repayments, they have nothing left in hand. With federal student loan consolidation you can combine all your loans into a single, easy to manage loan.

Federal Student Loan Consolidation Made Easy

Federal programs

There are two federal student loan consolidation programs in the united states that allow a student to consolidate all student loans into one single loan:

1. The federal family education loan program
2. Federal direct student loan program

the above two programs were established to address the following loan types:

* Stafford loans
* Plus loans
* Perkins loans

The offer of fixed interest rate for the whole loan life cycle is one key characteristic of consolidation loans by federal government targeting at students.

A brief history of the federal program

The federal student loan consolidation program was created in 1986 to allow graduates with more than one federal loan to consolidate them all into one single loan package. Such consolidated loans had a variable interest rate from 1986 to 1998 but in 1998, the us congress acted to convert the variable rate to one of a fixed rate weighted average. The latter came into force on February 1, 1999. Before this time, a consolidated student loan from federal government used to have a variable rate. That rate was determined by either the university or the lender, whoever is the loan originator.

In 2005, the government accountability office (GAO) stepped in, took under consideration the savings of consolidating all of the consolidation loans. On the basis of future variations in interest rates, loan volume, percent of defaults and cost estimates from the department of education, GAO concluded that this would cost an additional $46 million. GAO also concluded that this cost would be offset by a savings of $3,100 million which was in part by avoiding a $2,500 million cost in subsidies.

Interest implications

When compared with student loans offered by federal government, the term of payment for federal consolidation loans is longer. It can range anything from ten to thirty years. Even though monthly repayments are lower, the overall cost of the term of the loan is actually higher than with other federal student loans.

The fixed interest rate is derived from using a weighted average of the consolidated loan interest rates. This is done by assigning relative weights according to the amounts borrowed and then rounded up to the nearest 0.125%, but capped at 8.25% interest. Post-graduation grace periods and special forgiveness circumstances are two features of the original loans that have not been carried over to the consolidation loans.

Don't rush to decide

if you have existing loans that cost you considerable money, despair not. Consolidating your loans may be the way to go. However, it is important to appreciate the fact that federal student loan consolidation is not always suitable for every borrower with federal student loan payment.

Student Loan Consolidation Myths Busted

There are a number of misconceptions about student loan consolidation. Many people are under impression that the rates may fluctuate throughout the life of a loan. This is not true at all, as lenders are required by federal laws to give fixed rates on consolidation loans. Another common myth is that student loan consolidation ruins your credit. Financial institutions do not run credit reports for student debt consolidation. In addition, unlike some other loans, student lenders are not allowed to charge pre-payment penalties, allowing you to pay off your loan sooner and benefit from lesser interest charges.

Beware of lenders that tell you that only they are able to deliver special benefits to you, as it is not true. Student loan consolidation is an industry strictly regulated and monitored by U.S. Government, ensuring equal and fair treatment to all borrowers who face financial problems.

What's A Student Loan Consolidation Can Do for You?

Your student loans that use to support you financially during your school time will become your debt burdens when it comes to the payback time. While the total monthly payment might exceed your financial capability, different monthly due for each loan may cause your headache as well. A student loan consolidation can helps you to reduce your debt burdens with lower interest rate while make easy for you to manage all your debts by combining them into one.

Basically, the student loan consolidation reduces your debt burden in two ways: it can lower your monthly payment by extending the term of the loan and save you in interest with a lower interest rate. Depending on your loan amount, your loan term may be extended to 30 years or less. The reduced monthly payment will enabled you to have more cash in your pocket each month. However, by extending the term of a loan the total amount of interest paid increased.

Many student loan consolidation packages come with very attractive interest rate at various repayment terms. By consolidating your student loans with a lower interest rate can save you some money and lower your monthly repayment amount. You can further reduce the monthly repayment amount by taking up a long term's package. This will bring down the repayment amount to a more comfort level, but be aware that the long term means the total amount of interest paid will be increased.

Benefits of Student Loan Consolidation

Here are some of the benefits of student loan consolidation

1. Lower monthly payments

By consolidating all your student loans into one loan, you only need to pay off one loan monthly instead of several student loans monthly. Thus, your monthly payment is lower

2. Pay only one loan monthly instead of several student loans monthly

It is a lot easier if you have to manage only one student loan instead of several student loans with different payment deadlines. Also, sometimes with many student loans, you may ended up forgetting to pay one student loan.

3. Low, fixed interest rate

By consolidating your student loans, you will be able to take advantages of low, fixed interest rates. Currently, by law, student loan consolidation rates cannot exceed 8.25%. Furthermore, national interest rates are at a 40-year low therefore this is a good time to get one.

4. No credit card check or processing fees

No credit card check is required during the application of a student loan consolidation. The payment plans and terms are usually quite flexible in that they can customize it according to your financial standing.

5. Make monthly student loan payment electronically

While it is not necessary to make payment electronically, most lenders will knock 0.25% off your student loan rates if you make payment electronically. Also, using direct debit from your bank account will prevent you from forgetting to make a payment.

Sometimes it can get quite confusing as to the qualification of applying for a student loan consolidation. The official stand from the government is that students who are still in their grace period or who are still studying in school may qualify for government student loan consolidation

The government student loan consolidation nowadays are quite competitive compared to private sector, therefore I would recommend going for a government student loan consolidation. With so many benefits of getting a student loan consolidation, it is quite obvious to save money in the long run is to get one.

Basics Of Student Loan Consolidation

Are you concerned about the multiple student loans taken by you? Wondering about how to manage them? Well, student loan consolidation programs are set up for this very purpose. As a student you may think of venturing with student loan consolidation schemes. A whole lot of questions might be coming into your mind at this point. This is quite natural. However, there is no cause of worry or botheration. All you need to do is get to know the very basics of student loans consolidation process. Upon learning this you will be able to help yourself in going about with successfully managing consolidated student loans.

Consolidation of loans involves combining of the various loan products which may have been taken into a single product. It is undertaken in order to manage the loans with greater ease and to secure better terms of loan repayment. As a result of loan consolidation one will need to actually dole out lesser repayment amounts. Moreover, the period of repaying is also made higher thus facilitating procurement of funds which are to be provided towards making repayments. Now a student consolidation loan is such a consolidation loan and a part of the family loans which have been made available by the federal government under the Federal Family Education Loan (F.F.E.L.) program. The student consolidation loan enables you to unite together all or some of your outstanding education loans into a single new loan program. Even if the loans are of different kinds and are held by several different lenders it does not pose any problems. It is the U.S. government which guarantees federal student loans and these federal student loan consolidation schemes are applicable to all students whether in school, in the graduation level or on the phase of launching a career.

Federal consolidation student loans are characterized by their fixed interest rates and repayment terms extending even to 30 years. It is to be noted that there are the non-federal student loans consolidation programs too which are available. These may be obtained through banks, credit unions, other types of financial institutions, institutions attended by student etc. The private loans consolidations come in this category. The primary benefit derived from these loans is obtaining of a single monthly payment or reduction of the monthly payment. This is at the cost of increasing the total interest paid over the lifetime of the loan.

There are online ventures of student loans consolidation too. These sites set up by lenders can serve as convenient means of obtaining a consolidation loan. However, it is advisable to consult a professional qualified loan counselor before striking a deal online. The repayment options and other crucial points of consolidation need to be explored and some thought needs to be given towards checking out comparative usefulness of various deals.