How to Consolidate Student Loans - Federal Versus Private Loan Consolidation

Student loan consolidation can be used by student or parent borrowers to combine their multiple education loans into one loan with one monthly payment. As any student can take either federal or private student loans, he or she can also take a federal or private consolidation loan to make the education debt more manageable.

Both federal and private student loans offer significant benefits, but federal loans offer borrowers many benefits that don't come with private loans; for instance: low fixed interest rates, income-based repayment plans, loan forgiveness and deferment options. While some private lenders may offer them too, it usually is associated with some strings attached.

For those reasons, every borrower should always exhaust federal student loans options before considering a private loan. The same advice applies to consolidating student loans - always look at federal consolidation loan first and only if you don't qualify for a federal loan of it is not the right choice for any reason, and then seek a private consolidation loan.

It is important to remember that a federal student consolidation loan can't include any private loan. Moreover, if you consolidate your federal student loan into a private consolidation loan, you will lose your federal borrower benefits mentioned above (unless you private lender tries hard to get your business and includes them in the offer).

There are important differences between federal and private student loan consolidation.

First of all, with federal student loan consolidation, you will have a fixed interest rate, while private student loan consolidations are credit-based, which means that your consolidation loan rate will not be locked - it will be variable. So, while you will not have to go through credit check in order to apply for a federal consolidation loan, you will need it to secure a private consolidation loan.

Student loan consolidation rates are determined differently for federal and private consolidations. The interest rates for federal loans are set according to a formula established by federal statue. It's a fixed rate, based on the weighted average of the interest rates on each of your loans at the time you consolidate, rounded up to the nearest 1/8th of a percent and capped at 8.25%.

As private student loans are not funded by the federal government, they are subject to the terms determined by each individual lender (bank, credit union, other financial institution) and the market competition. In private student consolidation loans a borrower's credit is the primary factor in the variable interest rate offered to the borrower. As the base for setting the consolidation loan interest rate, the private lenders most often use the Prime rate or the 3-month LIBOR Rate, to which they add a margin. That margin varies from lender to lender and is applied according to the borrower's credit rating.

With regards to the interest rate on the consolidation loan, it's typical for both federal and private consolidation loan to include 0.25% rate reduction for automated debit payments.

Repayment of federal student consolidation loans begins within 60 days of the disbursement of the loan, with the payback term ranging from 10 to 30 years, depending on the amount of education debt being repaid and on other debts owned, as well as on the repayment option chosen by the borrower. Private student consolidation loans can also have repayment terms of up to 30 years, although they have fewer repayment options. Usually, repayment begins 30 days from the time your private student consolidation loan is funded.

While the most important factors looked at when deciding about how to consolidate student loans are the interest rates, borrower benefits and the terms of repayment, there are also other significant factors, such as: fees or cost to consolidate, prepayment penalties, loan amount limits, customer service, etc.

There are no fees or application costs whatsoever for processing and providing a federal student consolidation loan. It's against the law to ask for advance (up-front) fees for arranging a federal education loan or consolidating federal education loans. However, some federal education loans (e.g. the Stafford and PLUS Loans) may require some fees, but they are always deducted from the disbursement check. On the other hand, private lenders may charge fees for application and processing private consolidation loans. Some private lenders charge fees as high as 4% of the principal you owe.

Federal consolidation loan programs don't require a minimum balance to consolidate student loans; some private lenders require a minimum balance before they consider a borrower's application for consolidation. That amount varies from lender to lender, but usually is between $5,000-$7,500 in US-issued private education loans.

With both federal private consolidations, there are no penalties for prepayment - all payments in excess of scheduled payments will go directly to principal and that will help to repay your consolidation loan faster.

The application process for consolidation of private student loans differs from the federal consolidation. Sometimes application for private consolidation loans may be easier to complete (often done online or over the phone). However, it's worth remembering that federal loans usually have lower interest rates, borrower benefits and better repayment terms than private student loans. Moreover, federal applications for both original loans and consolidation loans require FAFSA, so with the federal consolidation, your application is already partly completed.

Mary Cala is the Author and Leading Expert on how to consolidate student loans and she blogs about student loan consolidation. If you'd like to learn about how to consolidate student loans, go to Mary Cala's blog - Consolidation Dept - where she provides tips on consolidating student loans and getting financial aid.

3 Key Reasons to Consolidate Student Loans

If you're like most recent college graduates, you've got a large chunk of student loans to pay back. You've likely heard about consolidating your loans and how it's something you should do. But do you know why? This article will explain 3 key reasons why student loan consolidation is something you should seriously consider.

1. Low, Fixed Interest Rates

Consolidating your student loans will lock you in to a low, fixed interest rate. This means that if your loans are currently ranging from say 8-12% and vary from month to month, consolidating will lock the interest rates at a fixed amount (maybe 8%) and it will stay that way for the entire life of the loan.

This is helpful when budgeting your finances each month because you'll know exactly what the payment will be and the low rates will save you money over the life of the loan.

2. Lower Monthly Payments

As mentioned above, consolidating gets you lower interest rates and that means you'll pay less in total for your loan. That also means on a monthly basis your payments will be set at a lower amount than those with higher or varying interest rates.

Lower monthly payments will give you more cash in pocket to spend on things you like or need, or give you the opportunity to invest the extra money which will earn you even more.

3. Flexible Repayment Plans

When you consolidate you are combining all your loans into a single loan from one lender. When you do this, the lender will often be willing to work with you to find a repayment schedule that best suits your situation.

A flexible repayment plan may mean extending the life of the loan up to 30 years, which will make monthly payments even more manageable. Keep in mind that when you do this, you will spend more money overall because you'll be paying the interest longer.

Consolidate Now

Hopefully now you'll understand the enormous savings you'll get by consolidating your student loans as soon as possible. The three reasons above are only some of the more meaningful benefits consolidation will offer you. There are other fringe benefits as well that could mean even more savings.

Before consolidating please be sure to completely research your situation, as all circumstances are different. In some rare cases, consolidation can end up costing more money.

Despite those few occasions when consolidation is not necessary or beneficial, the majority of borrowers should be taking advantage of the opportunity to consolidate student loans.

To learn more about school loans consolidation and get some additional student loan advice don't forget to visit the School Loans Consolidation Guide.

Why Consolidate Student Loans

When you consolidate student loans the process is often long and sometimes difficult. Many students will find it confusing with obstacles that are tiring. For that reason is best to consolidate student loans as quickly as possible after graduation. For the most part, the student loan company will handle the difficult issues when you consolidate student loans. A student loan consolidation combines several payments into a single much lower monthly payment. When you consolidate student loans it makes life easier at a time when you are launching your career. With certain repayment plans, the student can easily budget out the payment each month to ensure that the loan is retired promptly.

When you consolidate student loans you not only lower the monthly payment, but budgeting your finances becomes much easier. The consolidation process can also potentially lower your interest rate, saving you significant money over the life of the loan. So don't get discouraged when you consolidate student loans, as the student loan company is always there to help.

When you want to consolidate student loans, the Internet is the best place to find information on repayment options. Many options are available to you when you consolidate student loans, so it is important to get as much information as possible to assure you get the best payment plan. Some payment plans even have a sliding scale to compensate for lower income when you are just getting started in your career.

Before you apply for student loan consolidation you should check out student loan forgiveness programs. You can qualify to have your student loans forgiven by:

1) Performing volunteer work:

If you serve for 12 months in AmeriCorps, you receive up to $7400 in
stipends plus $4725 for your loan retirement. Call 1-800-942-2677.

Peace Corps Volunteers can retire up to 70% of consolidate student loans Call 1-800-424-8580 or 1-202-692-1845.

Volunteers in Service to America (VISTA) can earn up to $4725 in debt forgiveness. Call 1-800-942-2677 or 1-202-606-5000.

2) Performing military service:

The Army National Guard offers $10,000 of repayment funds its members.

3) Teaching in certain types of communities:

The American Federation of Teachers maintains a list of loan forgiveness programs for teachers.
Also contact your local school boards to learn which schools qualify for loan forgiveness

4) Medical and Legal service in certain communities.

Many law schools forgive the loans of students who serve in public interest or non-profit positions. Call Equal Justice Works 1-202-466-3686 or fax 1-202-429-9766.

The US National Institutes of Health's NIH Loan Repayment Programs repay up to $35,000/year of student loan debt for US citizens who are conducting clinical medical research.

The more you know about your student loans and the options available when you consolidate student loans, the better judgments and decisions you will make. Most students who do not want to do volunteer work can benefit when they consolidate student loans. If you have small, low interest rate student loans, it is best to keep them separate when you consolidate student loans to preserve the advantageous interest rate.

To consolidate student loans is a smart way of managing student loan debt. Study all the options on the Internet and make good decisions on how to pay back student loans. When you consolidate student loans it does not remove all the pain of repaying your debt, but it makes life more enjoyable while you do.

How to Consolidate Student Loans - 6 Simple Steps

With tuition costs on the rise, students are using specialized loans to help them with costs. Once graduated, students may find themselves in more debt than they can financially stand. Fortunately, large banks and financial institutions recognize the problem and offer consolidation options for these cases. If you're wondering how to consolidate your student loans, then follow these easy tips:

* Check your credit history and score. A higher score will generally get you better rates, and offer you more options. A low score may not necessarily push you out of the game, but obtaining a favorable loan may require more work and research on your part. Knowing your credit score beforehand is a smart way to approach the situation so you don't get fooled into a loan you don't need.

* Visit one of the many student loan consolidation calculators on the internet. This will allow you to see how much you can potentially benefit from consolidating your loans. Once again, knowing more beforehand will allow you to make sound decisions later.

* If you have federal loans, you should consolidate them before you tackle your private or alternative loans. The rates and terms for federal loans tend to me much more favorable, and less dependent on your credit score. This step can save you a lot of money.

* Once you've successfully consolidated your federal loans, it's time to tackle private and alternative loans. Start by consulting a loan counselor at your local branch. They may have consolidation options for you. If not, you can still get sound advice on what the normal rates and terms are at the time.

* Once you've educated yourself on the average current rates and terms, it's time to go loan shopping. The best place to start is the internet, as there are a variety of banks offering their consolidation services. Using the knowledge you acquired from checking your credit score, using loan calculators, and free consultations, compare each offer. Write down the rates, terms, monthly payments, and any additional fees each loan features. Decide which loan works best for your needs.

* As long as you prepare yourself with the right knowledge, consolidating your student loans is a relatively easy and painless process. Be sure to carefully read all of the terms and conditions, and calculate your total payoff after interest. Sometimes lenders will entice you into loans with higher interest but lower payments. Although the lower payments may seem appealing, you end up paying much more in fees and finance charges.

Using sound debt management principles, paying off your student loans shouldn't be the hassle it once was. Good Luck!

Consolidate Student Loans - Smart Tips

Consolidating student loans is a great opportunity to lower your monthly payments and free up some cash each month. Here are some smart tips we have for you on the process of consolidating student loans:

oIf you are in your grace period, it is the best time to consolidate your student loans. You are in the grace period if you have finished school but you are not yet in the repayment period, which usually begins 6 months after your graduation. If you consolidate your student loans during your grace period you can usually qualify for a lower interest rate from the lender.

oThe federal government passed a recent law that lets borrowers consolidate their student loans with any eligible FFELP (Federal Family Education Loan Program) lender. This means that you have more lenders to choose from than you did in the past.

oThe federal government has set the interest rate on consolidation of federal school loans, and this is part of federal law, so lenders are legally bound and cannot charge you a higher interest rate for any reason. It's always best for you to get the lowest interest rate you can from the lender that you choose, but interest rates on consolidating student loans that were backed by the federal government are fixed for the life of the loan and can't be higher than 8.25%. That doesn't mean that a lender can't charge you less interest, so it still pays to shop around for the best rate.

oIf you have both federal and private student loans, don't let your lender put them together into one consolidated loan. If you do, you will lose the federal benefits that are part of your federal loans. For instance, the cap on interest charged is at 8.25% now for federal student loans, and you would lose this cap if you consolidated both federal and private loans into the same loan. Deferment and forbearance are options that you can use with federal student loans if you fall upon bad economic times like losing your job to layoff or termination, becoming disabled and unable to work, etc. These are important benefits that you would be wise not to lose. Deferment is when the government allows you to postpone payment of the principal on the loan for a period of time. Depending on the type of loan you have, you may or may not need to repay the interest during deferment. Forbearance is when the government allows you to stop your payments for a period of time, but you still need to pay the interest payments. In both deferment and forbearance, there may be ways for you to add the interest payments onto the back of your loan so that you pay nothing during the period of deferment or forbearance.

oThe Higher Education Act was passed for the protection of students taking out loans for educational expenses. It specifically mandates that federal student loan consolidations have to have fixed interest rates, no processing fees or loan fees of any kind, no credit checks for the borrower, no prepayment penalties if the borrower pays off the loan early, and a lower interest rate if the loan is consolidated during the grace period.

Tips on Student Loans Consolidation

As if education was not hard enough to handle and career making in itself a very daunting and difficult task; in the growing world of technology and advancement, education has also become a very expensive affair and the need to find the right type of education with the quality of offering is a matter of grave consideration these days. Along with all these nightmarish elements to consider, is the fact that people are suffering from financial hardships and living has become terribly expense in most parts of the world due to a global inflation in economy and a scarcity of resources to cater the ever-growing needs of a massively multiplying population. Education is a critical element of our lives.

Funding your way through education is a hectic and time-consuming process in itself, especially, when the amounts scale to rocketing heights. This leads to a dependency on borrowing and leaves the borrower into a crisis from which he or she finds himself/herself entrapped even before embarking on a full fledge career. A bad start! Yes. However, there is no other option, other than to borrow and for this purpose, student loans consolidation occurs. The phenomena have a wide range of occurrence all over the world; especially in the advancing countries of the world, where it is becoming a norm over a relatively short period.

Student loans consolidation may seem as an attractive proposition at first sight, but there is an element that needs a consideration, which must never be ignored: can the debt be paid off? Yes. This apparently is the question, which skips the mental functioning of most borrowers, who do not realize what they are ultimately landing themselves into. Lending authorities will blissfully comply with the demands of student loans consolidation because they are aware of the fact that the immense profit accumulating from the interest will keep them running for a better part of their careers and leave the borrower in daunting circumstances almost all his/her life.

Avoiding the dependency on student loans consolidation is always a good idea, but if there is no escape from the predicament of circumstance and toiling towards a goal becomes unrealistic, then it is wise to consider your options thoroughly. The gravest consideration of all is the realization that how much is the person liable to pay and whether his/her ability reflects in making this payment altogether.

It is better to have a motivation that reflects in a motive that brings about conviction for scholarly funding to pursue studies, if the individual dreams of success. The conviction is not a rare thing to produce, even given, the stern competitiveness existent, there is always room for the passionate mind to appeal for the sake of mankind's bettering, a fair chance to be given, as a token of appreciation for his or her enthusiasm. But if you do possess no such talent in you and wish to join the struggle to find a job in this complicated and boring world, then the need for a thorough and reflective understanding is somewhat of a prerequisite in the case of hefty interest rates when considering student loans consolidation.

How Do I Consolidate My Student Loans?

If you graduated in the spring, or will be graduating this spring, now is the time to look into consolidating your student loans. Although your school gave you some information when you took out your loans, they may not give you the full scoop on consolidating after you graduate. If you've been wondering, "How do I consolidate my student loans?" keep reading to find the answer.

Student Loan Consolidation Offers

Until mid-2007, most people with student loans received numerous offers to consolidate their debts. Due to a change in Federal lender subsidies, many of these solicitations have stopped, but that doesn't mean you can't consolidate your college loans.

Consolidation Eligibility

If you have Federal Stafford, PLUS, or Perkins loans, you can consolidate them together. Private loans may be eligible for consolidation, but not all lenders agree to become part of a consolidation. In most cases, it's not possible to combine federal and private student loans due to the differences between loan terms.

How to Consolidate Student Loans

Consolidating Federal loans is a fairly straightforward process. Consolidating private loans is more difficult, but it can be done.

Consolidating Federal Student Loans

1. Gather your loan paperwork for all of your loans. Depending on the cost of your school and the number of years you accepted loans, you will have several individual loans. Most students have both subsidized and unsubsidized Stafford loans for each year. You may also have Perkins loans or PLUS for each year.

2. Contact the primary lender for your loans. Depending on your school, this may be the Federal Direct loan program, or an individual.

3. Ask about any additional offers for rate reductions with automatic payments or following a certain number of on-time payments.

4. Research terms available from other consolidation lenders online to see if anyone offers a larger discount for automatic payments or an additional discount after 36-48 on-time payments. Due to the recent changes in funding, most lenders now offer a quarter percent reduction for automatic payments. A few also offer a quarter percent reduction after 36 on-time payments, but these offers are harder to find.

5. Choose your lender and sign the paperwork. Your old loans will be paid off and you'll now receive payment instructions for your new consolidation loan. Sign up for automatic payments promptly. There may be a one-month delay before the program takes effect, so be sure to make on-time payments for that first month. If your grace period expires before you file for consolidation, make sure to make the payments until the consolidation process is completed.

Consolidating Private Student Loans

1. Private loan consolidation is more difficult to find, but it is possible if you have a large number of loans.

2. Gather your loan documents.

3. Research private consolidation lenders online for minimum loan balance and interest rate requirements.

4. Contact your current lenders to ask about consolidation offers.

5. If you are eligible for consolidation, ask about discounts for automatic payments. A few lenders offer them, but they're harder to find due to the change in funding laws.

Benefits of Consolidation

The primary benefit of consolidation is simplified payments. Rather than five, ten, or more payments every month, you have just one or two payments to make. Without automatic payments, you never have to worry about missing a payment.

In most cases, consolidation stretches the term of the loan, so you may actually pay more in interest over the life of the loan. If possible, try to accelerate your payments as your income grows to avoid paying additional interest. However, any discounts you receive for consolidating student loans will reduce the total interest you pay over the life of the loan.

Finally, consolidating student loans makes it easier to keep track of your total annual interest paid. That figure is important if you're eligible for the student loan interest tax deduction. Although the deduction won't save you a lot of money, every little bit helps.

Consolidate Student Loans to Improve Credit Ratings

Many student borrowers consolidate student loans with the main intent which is to experience financial relief from the stress brought about by multiple loans. However, do you know that there is more to college loan consolidation than just relief from stress? I believe that this is one of the best advantages there is - which is the ability of consolidation to improve a borrower's credit rating.

Let us be reminded that it has always been the same scenario for many students; as academic years go by, many of them experience the gradual but steady accumulation of student loans. Do you know that a person having multiple loans will most certainly earn bad credit because of this?

When you consolidate student loans, basically the multiple loans disappear. Well not exactly. They are just replaced with a new loan - a consolidated one. Where did the old loans go? They are wholly paid up by your lender and you are assigned with a new single loan. This with this loan, it helps in creating a better image of your financial standing, thereby improving your credit score.

With the improved credit rating, you also benefit from college loan consolidation with the cost savings which can be quite significant. Again, we have to reiterate the importance of refinancing student loans because with the number of debts greatly reduced, it easily is an important factor in increasing credit score. And with better credit, this can obtain for you a better financial image to banks and creditors.

To consolidate student loans is a great start in creating a better financial standing among student borrowers. Best of all, it helps in putting back your credit rating in the right track. Easily you can get the help that you need as a lot of efficient and effective lending companies online can offer you the best refinancing program options. It is best to ask for assistance of a professional loan adviser to understand fully the benefits of loan consolidation programs on your financial concerns.

Consolidate Student Loans - You May Defer Merging of Loans

While it is best to consolidate student loans and be able to pay them all off more effectively, there are times when we simply just need to defer this merging of loans. And likewise, all student borrowers should be reminded that once you have used up all your options on deferment when it comes to your current federal student loans, consolidating such loans can actually offer you with more opportunities to defer.

The most appropriate time for anyone to consolidate student loans is after his graduation day. For most of the student borrowers, their loans will actually become due at around six months after school has finished. This is a very important time, meant to be a grace period that will allow the borrower enough time to properly organize their student loans and finally merge them via a student loan debt consolidation program. And so the right thing to do is prepare yourself and your loans for the debt consolidation program for a few months until such them when the best time to consolidate student loans has arrived. It is indeed advisable that one does not implement the student loan debt consolidation proper until the grace period has passed.

What happens with the separate, unconsolidated college loans while on the grace period? During this time, the interest charged on the loans will be taken care of by the federal government. However, some are stubborn borrowers and wanted to have the loan consolidation immediately. If you happen to consolidate student loans even before the grace period, then payment of loan interest will fall under your responsibility. You in effect had set the federal government free of their responsibility to pay for the interests because of your early consolidation.

How to Consolidate Student Loans - Brief Guide

 If repaying multiple loans month after month is actually making your life miserable, consolidating student loans could relieve you from your financial hassles. Combining all your existing student debt into one loan program will greatly simplify your finances, making your life easier. If you are wondering how to consolidate student loans, the good news is that it does not need to be all that difficult. All you need to do is understand a little about these student loan consolidation programs, and that will help you make a smarter decision on whether or not consolidation is right for you.

Have a look at your existing student loans

If your existing loans are issued by the government with a minimal interest rate, consolidating your student loans may not be the right thing to do. Most of the consolidated student loan programs are provided by private lenders and this means a higher interest rate compared to college loans provided by the federal government. When you try to consolidate your government student loans, you could lose out on money and your loan payments could also get higher. This is an important thing to consider when you are looking at how to consolidate student loans.

Consolidate student loans with your current lender

If you already have existing loans with a private lender, you will be eligible for student loan consolidation through the same lender. Discuss the best possible options for your specific situation with your lender; your lender could offer you a refinanced loan program with a lower interest rate or consolidate multiple loans for you, irrespective of whether you hold all the loans or not.

There are a lot of advantages to dealing with your current lender, for instance, you know the lender well enough to understand all the terms and conditions and lender's tend to favor existing customers if they have a good history of on-time payments in the past. And if you do have a good on-time payment history, your lender will be more than happy to offer you a convenient student loan consolidation at a good interest rate.

Check for a minimum balance rate

When you go about understanding how to consolidate student loans, you will learn that most lenders only provide student loan consolidation programs for those who have outstanding student loan debt that exceeds $7,500. When you are looking to consolidate college loans, make sure that you carefully look at the minimum balance requirement before investing your time and energy going through the entire application process.

Consolidate Student Loans, The Advantages

A consolidation loan is just what it sounds like. With a loan consolidation program your high interest student loans are combined into one sometimes lower interest loan, with one lower monthly payment, that you need to make to only one lender.

Consolidation Loans are much like the same idea of refinancing a mortgage, or taking a home equity loan to consolidate credit card debt or pay off other high interest loans. Just about every kind of Federal Student Loan qualifies for loan consolidation including; FFELP, FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. In some instances loan consolidation is even available for private education loans as well. Loan consolidation is offered for student loans for either graduate or undergraduate schools.

Interest rates on consolidated student loans are calculated by taking a weighted average of the loans being consolidated, and are then rounded up to the nearest 1/8 of a percent. The new interest rate cannot exceed 8.25%.

So for example let's say that a student has a couple of Stafford Loans that were originated on or after July of 2006. The fixed interest rates on these loans would be 6.8%. If only these loans are consolidated the new resulting interest rate would be 6.875%, a statistically insignificant increase, but the student would gain the advantages of only having to pay a single lender, and often gets extended time for pay back.

In the case of consolidating mixed loan products, like say a combination of Perkins Loans and Stafford Loans, the resulting interest rates will always wind up somewhere in between. The weighted average will give you interest rates that are lower than your highest rated loans, but that will also be higher than your lowest loan products. So again the overall increase or decrease in your interest rates will be negligible - the true advantage of loan consolidation is not necessarily in lowering interest rates, but in actually lowering monthly payments, and extending the term of your loans, making your student loan debt more manageable, and less likely to result in default.

Keep in mind the other advantage to loan consolidation is that there are no fees or costs associated with consolidation, ever. If any service is charging any kind of upfront fees for loan consolidation, they are likely a scam and should be avoided.

Student or parent borrowers can apply for a consolidation loans, however parent loans cannot be combined with the student borrower loans, only loans to the same individual can be consolidated. But of course a parent borrower and their students can consolidate their own loans separately.

Even loans that are in default but with satisfactory repayment arrangements, may qualify for loan consolidation.

Consolidate Student Loans - 3 Helpful Tips

Earning a college degree is one of the most significant accomplishments in life. However, going to college these days, especially private universities can be costly and can put you well into debt if you are not careful. Many students need help to pay tuition costs and most college students turn to student loans as an option. During college, students do not think about repaying the loans back but soon after graduation the reality sets in. What is the best way to handle the school debt? One option is to use student loan consolidation as a means to assist in restructuring the finances of those students who have accumulated numerous loans. Here are some helpful tips to consider when you consolidate student loans:

1) Research

Do your research when investigating lenders. Don't assume all lenders are looking out for your best interests. Just like you did in college, you need to make sure you do your homework and find a credible lending institution. While comparing and choosing the best lender to use you should consider flexible application procedures such as an online application and the ability to manage your account online. Loan counselors on the site can help you decide if what they are offering is what's best for you. Take the time to compare the different incentives between lenders. This will enable you to make a well informed decision based upon weighing the pros and cons of each lender.

2) Consolidate your federal and private loans separately

Many times graduates will get one loan that consolidates all of their federal and private student loans. Be aware that if you do this, you could lose some of your federal loan benefits. One example is if you combine both private and federal loans you can lose out on the interest tax deduction benefit you get with your federal student loans. Try not to be hasty when going though the consolidation process as there are many benefits to keeping these loans separate.

3 Manage your new payment schedule

When you consolidate student loans, most likely you will have obtained a lower interest rate. The lower interest rate combined with extended payment terms would result in lower monthly payments. Take advantage of the lower payments and pay more towards the monthly bill. It's recommended that you pay about one-third more than the minimum payment. If you can do more then that's better, but be sure that you can afford it. The benefit of handling your monthly payments this way is that you will pay off your loan faster than normal and at a lower rate.

Student loan consolidation is a worthwhile option and can help to lift your student loan burdens. Research lenders and the sooner you consolidate student loans the faster you can take advantage of the benefits of low interest rates and lower monthly payments.

Merits and Demerits of Consolidate Student Loans

The greatest advantage of a student loan consolidation program is the conversion and merger of several loan payments in to convenient consolidate student loans. You gain an advantageous position when you get these with the terms reset. The consolidation brings along with it many benefits like deferments and lower monthly payments, thereby lessening your debt worries and protects your wallet. You can start saving the money right from the day you take that, and can enjoy financial freedom.

Before attempting to these loans, you should try to know about the procedures involved in consolidating your various private student loans. You can really make your life easy by joining the private student loan consolidation program and pay just one decreased monthly payment. In order to fit to your financial budget, you can tailor your needs of private loans by analyzing the monthly payments and interest rates. By turning to such plan, you are putting your one or multiple loans into one basket so that you can make the repayment easily. The interest rates of consolidate student loans are set according to your credit rating. With a better credit score, you can negotiate with your current lender or switch over to another lender for a lower interest rate. Alternatively, you can study the interest rates by comparing the private loans with home equity loans. By fixing your variable interest rate, you can also opt for home equity loan at fixed rates to fund your private ones.

When you try this, you will find that there are different types of lenders offering varied interest rates. In the case of private consolidation program, the interest rates of the loans will be determined by the individual lenders. In some cases, you may have to pay even some amount of extra fees for these. Do not plan to take from the private lenders along with that of federal Government. You have to treat both of them separately. While making your choice to these loans through private lenders, make enquiries about the rate fixed by them, fees attached with them and whether they impose any prepayment penalties.

You have to learn how to consolidate these in a better way in order to get maximum financial benefits. To avoid frustration in future, and to save time and money, you have to explore on the various types of these loans. If you find it difficult to make the repayment on time, you may have to face the danger of default of these, which will land you in deep trouble. There are some negative aspects associated with the defaulting here. Other lenders may even deny you fresh loans when they come to know of that default. For example, you may get your wages reduced, and a bad credit rating with extra interest and fees on the original loan. To make matters worse, your tax refunds may also be seized. Only when you consolidate student loans, and make the repayment on time, you can bring back normalcy in your trouble torn loan life. To save your financial ship from the deep ocean of debts, it is also very important for you to find out the right lender to consolidate student loans.

The federal consolidate student loans offers you a fixed rate. Though the private agency presents a fluctuating market rate, you can enjoy their unique service with complimentary packages in consolidate student loans

Consolidate Student Loans - How it Works

Consolidating student loans is simple: If you meet certain requirements and you have student loans, you can consolidate them into a single loan. What this means is that the lender you choose will pay off the current student loan amounts that you still owe, and will combine the different amounts that you owe into just one loan. When the lender does this, you will probably see your monthly payment on student loans drop. And that's just what you are looking for, an easier and more affordable way to pay down your student loans.

Both students with student loans, and parents who owe on PLUS loans that they took out for their students, can consolidate their loans. Consolidating student loans (as long as they are federal student loans) does not require that you have a credit check done to prove that you qualify. Is that surprising to you? Well it's true. Your credit score, no matter what it is, does not disqualify you from getting a federal student loan consolidation approved.

To start out, you'll need to know whether your loans are federal student loans or private student loans. Federal student loans have the backing of the federal government and are usually known as the Perkins Loan, Stafford Loan, PLUS (Parent Loan for Undergraduate Students) or loans from the Department of Education. There are also other kinds of federal student loans, so you'll need to look at your student loan report to check on what type of loan you have. A private student loan is a loan that you or your parents took out from a private lender, and loans like this are not backed by the federal government and do not qualify for federal student loan consolidations.

If you are falling behind in your payments on this type of loan, call the lender that you make payments to and ask whether you can consolidate your loans with them or negotiate lower monthly payments.

For consolidating student loans, you have to:

o Have at least $10,000 in student loan debt. This $10,000 must be all federal student loan debt, not a mixture of federal and private loans.

o Be in your grace period or repayment period. Your grace period is the time period after you take out a loan before your payments start. Your repayment period begins after your grace period ends. Your repayment period is when you make monthly payments on your loan(s).

o Not be in default status on any of your loans. Default status is when you have fallen several months behind in your payments and you have received a notice of default from the lender. If you are in default, don't be afraid to look for a consolidation loan anyway. A lender may be able to work out an agreement on how you can pay off the default and still consolidate your loans.

o Be a U.S. resident or permanent resident. Notice that citizenship is not a requirement, just residency.

o Not have consolidated the same loans before, or have gone back to school and accrued more loans to consolidate with the original consolidation

Consolidate Private Student Loans

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.

Should You Really Consolidate Student Loans?

If you're pondering whether or not to consolidate student loans, consider this; all college loans have unique attributes, and not all may be perfectly suited for student loan consolidation. Student loan consolidation is, in most cases, an outstanding option for reducing monthly payments, locking in low rates, and earning opportunities to shave money off your loan balance with lender incentives. When you consolidate student loans, you lock in the current interest rate by allowing the lender to repay the entire amount, then repaying the lender free from government interest rate fluctuations.

PLUS Loan - Good Choice for Student Loan Consolidation

Like many college loans, the PLUS loan (Parent Loan for Undergraduate Students) is a type of federal loan with a variable interest rate. This means that the monthly payment will change when the government reconfigures the interest rates annually (July 1).

The interest rates on PLUS loans are generally higher than other types of college loans so when interest rates increase, PLUS loans can be greatly affected. Since college loans are consolidated by social security number, parents should apply separately for PLUS loan consolidation.

Perkins Loan - Consider before refinancing

The Perkins loan is a fixed rate loan and has some unique benefits that can be lost with a student loan consolidation. The Perkins loan has a forgiveness program that will waive all or part of the repayment amount if the borrower works in specific occupations that provide a valuable service to the community. Some such eligible occupations are teachers in low income areas, nurses, and medical technicians.

If you're not eligible for the various loan forgiveness opportunities offered by the Perkins loan, there is still another point to consider. Because the Perkins loan is a fixed rate loan, and because the interest rate on a student loan consolidation is determined by the weighted average of the other loans, you could actually pay a small percentage more on a consolidated Perkins loan over time.

Stafford Loans - Good Choice for Student Loan Consolidation

Stafford loans are the most common loans, and also the most popular type to consolidate. Stafford loans have a variable interest rate like the PLUS loan, making refinancing a smart choice. Loan consolidation can reduce the repayment amount by up to 63% if refinanced through the right lender.

Like the Perkins Loan, the Stafford Loan also offers a few forgiveness programs for those in certain teaching positions and other various public service jobs. Check to see if you're eligible for any forgiveness programs before applying to consolidate student loans.

Health Professions Student Loan (HPSL) - Consider before refinancing

The HPSL loan for medical professionals is a fixed rate loan like the Perkins Loan. The HPSL comes with certain deferment options that may be lost after consolidation.

The HPSL offers a 3 year deferment period designed to give relief to medical professionals during residency. This deferment option may or may not be lost after consolidation. Those who have HPSL college loans should inquire with various lenders about deferment options.

Direct Loans - Good Choice for Student Loan Consolidation

Some schools offer Direct Loans, meaning that the money given to students comes directly from the federal government, not through a private lender. Borrowers who obtain these college loans must first consolidate through the Direct Loan program, but then have the opportunity to shop around for lower interest rates.
Beginning July 1st 2006, borrowers will face much stricter regulations when consolidating Direct Loans. After the 1st of July, borrowers will only be able to switch lenders if their current lender does not offer a student loan consolidation with an income sensitive repayment plan.

The two most popular types of loans are the Stafford Loan and the PLUS Loan which is the reason it's so popular to consolidate student loans. Many students acquire a variety of college loans that may not be beneficial to consolidate. Student loans are not all created equal. It's important to understand the unique qualities of your individual loans and work with your lender to determine the option that is right for you.

Consolidate Student Loans - A Blessing in Disguise

Are you having a problem in repaying your student loan? Don't worry. Nowadays, it has become a very common issue among many graduates and the situation has only worsened due to the present economic scenario. There is no need to default your loans even if you are not able to qualify for both forbearance and deferment. Consolidate student loans is a readymade solution for people like you.

It is a blessing in disguise, and the best solution, when you are confronted with such a situation. Now, with these you can bring all your multiple student loans under a single umbrella and manage the monthly payment with low interest. To avail the facility, you have to exercise the option to this either with a private agency or with the federal government. The federal consolidate student loans offers you a fixed rate. Though the private agency presents a fluctuating market rate, you can enjoy their unique service with complimentary packages in this. Before deciding your choice on these packages, you have to do a little research on different loan consolidators to find out the suitable option.

When you apply for these, the loan consolidators will advice you the best repayment plan after analyzing your individual financial circumstances and needs. What is best for you may turn out to be the worst plan for another. Therefore, only a right choice will give lasting financial peace in your life.

Remember that even after opting for these loans, you are still under a debt, but you can loosen your belt, as you are now permitted to make only a low monthly payment under this. Further, you have to be extra cautious while spending your money, as any default here may land you in great trouble. Buy only affordable things through credit card and don't forget to clear your monthly bills, and if you care to make only a minimum monthly payment, the outstanding balance with a high interest rate, will make deep hole in your wallet.

While exercising your option for these loans, you have the choice of extending the deferment time or lowering your payments. In case you are opting for both federal as well as private consolidate student loans, it will be better for you to keep them separate. Though you may be tempted to make all your loans into a single loan payment, ultimately, you will lose the benefits offered by the federal. You can exercise a more convenient deferment option in the Federal one, with tax deductible interest. You stand to lose certain benefits of federal loans when you consolidate both federal and private loans. After converting into federal loans you can attend to private student loans consolidation.

Under the FFEL consolidation loan program, you are allowed to these into a single loan payment with the help of a commercial lender. By exercising this option you help your own credit rating to improve as a zero balance will be notified by the credit bureaus on all your previous loans. You become eligible for this kind of student loans once you become regular in making at least three consecutive monthly payments. Under the FFEL loan program, when you opt for a longer repayment period of a maximum of 30 years, you can save a lot of money through low monthly payments.

The federal consolidate student loans offers you a fixed rate. Though the private agency presents a fluctuating market rate, you can enjoy their unique service with complimentary packages in "consolidate student loans".

Consolidate Student Loans and Shop Online

If you run a home business, you know that budgets can be pretty tight. Saving money wherever possible can be the difference between the business that succeeds and the one that fails. This article represents a broad survey of things you can do, from consolidating your student loans to getting small business deals on supplies, that will help you spend less each month.

Next Time You're Online, Buy Something

Billions of dollars are spent each year online. Rather than suggest that you hurry and move your business online, I'd like to suggest that you add some of your dollars and cents to those billions already spent. Companies who move operations online reduce their overhead costs and often pass on those savings to you. Computers, airplane tickets, even student loan consolidation, can be purchased or arranged online. It has been my experience that I can find almost everything I want online for less than I can find it anywhere else. Next time you're thinking about biting the bullet and making that big purchase, spend a little time shopping around online and see if you can't save a few dollars.

Consolidate Student Loans and Get Your House in Order

Chances are good that you've been out of school for a while, but don't skip this paragraph. If you consolidate student loans or other financial obligations, you will typically save a great deal of money each month on your monthly payments. Running a home business often blurs the line between personal expenses and business operating costs - do yourself a favor and make sure you have your personal financial affairs taken care of before you find yourself overwhelmed with past obligations. The government might not have cared about your credit score when they gave you those student loans, but banks looking to give business loans are a whole different story. Making sure everything is taken care will keep financial doors open that, once they're closed, are very difficult to reopen.

Score One for the Little Guy

Believe it not, most people want small businesses to succeed. There are a lot of people willing to give you a break on prices because you own a home business, but you might need to ask about it. Office supply retailers and computer distributors sometimes offer discount prices to registered small business owners. The savings are not always monumental, but even the smallest savings multiplied over a year or two start to add up to pretty substantial amounts. Shop around to see if the suppliers you use are willing to offer you a discount on supplies or equipment.

Do Without...For a While

I'm probably not the only person that drove a car that was older than I was during college, or who ate Ramen noodles more than once almost everyday. Don't forget the lessons you learned while you were a poor college student - the same ability to make do with what you have can save you a lot of money in the long run. I had just graduated from college and I wanted to get a new computer to replace the older, though fully functional one I was using. This was before I took my own advice to consolidate student loans, so money was still pretty tight. I wanted to kick myself when I saw that the price on the computer I bought dropped $300 in three months. Some expenses are necessary and unavoidable. For everything else, look to see if you can manage with what you have for a while longer.

Don't Do It Alone

Nobody likes data entry - it's time consuming, boring, and time consuming. If you find yourself spending too much of your day punching numbers into spreadsheets, consider hiring someone or outsourcing it to another company. If you think that you can't afford the part-time salary, do an inventory of your time and see if what you would pay someone is worth the amount of time you'll be able to invest into the meatier matters of your business.

I know I'm risking sounding like your father giving you a lecture about money, but remember that a penny saved is a penny earned. A successful business minimizes costs while maximizing profits.