College Loan Consolidation

Thursday, March 15, 2012

What The Student Consolidation Loans Offer

To make it simple, the best question to the student loans lenders is, what relief the new loan brings to your particular situation? Are the different loan options wise for you, or should you proceed with the present loans?

Consolidated Loans Will Bring And Take.

If you consolidate into one loan and lengthen the loan running time, you will pay more interests. Some loans, like Perkins, allows a student to not pay a part of the owed capital, if a student works a certain time as a teacher or in the public service.

If this student will consolidate, he will lose this benefit. Stafford loans grant a six months grace period, which means a payment free period after graduation. If you will consolidate you will lose this benefit. These two examples show, that the exact guidance from the expert is useful.

How To Start The Process?

The market is in the Internet, where the shopping is easy. But you can still ask the first quotes from the lenders, which borrowed you your student loans. The key thing is, that you ask the quotes with the same information from each single lender to make the comparison easy. Before you approach a candidate lender, make sure this company is reputable and long term vendor. The consolidated loan is always a long term commitment.

The Long Running Time Makes Small Benefits Big.

The question is about the accrued costs, like the interest rate. Think this for a while. The 30 year running time and a small difference in the rate! The saved or lost money can be substantial. Many lenders offer the same interest rates, but the different perks can form the difference. The list of perks can be creative. It can include borrower benefits and student loan payment reliefs after certain on time payments, for instance.

Ask About The Future Possible Changes.

If you get a fixed rate loan, what happens, if you want to pay it off with a one time payment. Or if you want to lengthen the loan running time? Are these options possible within the present terms? And are there other payment options, which makes the loan flexible for the future circumstances? For instance some lenders offer an option for an income related payment.

The Critical Time Right After Graduation.

Usually the graduates have some time until they get their first jobs after the graduation. Some lender grant grace periods, i.e. the six month times before the payments will start. If it seems, that your first job, or first salary, is far away, it is important to ask, what special terms you can get to manage over this period.

There are also other small questions, which are important. How much the payments can be late, before the punishment comes and if it comes, what is it? It is also important to calculate, what is the difference between the present loan program and the consolidated loan program during the whole running time? For a couple the consolidation does not pay off, because if the wife will die, a man has to pay the whole loan or if he meets the divorce, he will have to pay the whole loan.

Understanding Student Consolidation Loan

Student consolidation loan is a situation where series of loans are combined together to make one bigger loan from a single lender, which is then used to pay off the balances on the other loans. It often reduces the size of the monthly payment by extending the term of the loan beyond the 10-year repayment period.

One good thing about it is that you can consolidate your loan with any lender without any problem or hassle. Most lenders do require minimum balance before they will consolidate your loans. There are many loan service companies that you can approach for this service.

However, when seeking Student Consolidation Loan Services, the following vital points must be your guiding principles.

1. There must be a wide range of repayment plans options available for you to choose from. Plan should include graduate and extended repayment plans that will make you pay smaller monthly payments over a longer period of time.

2. The company in question must offer federal, private and the combination of the two types of consolidation. This will enable you stay with only one company for the effective management of your loan.

3. The company must have a good customer care that is ready to assist anytime the need arises.

4. It must be convenient and flexible.

5. Your students' consolidation loan company must be able to offer competitive rate of interest at low finance charges.

6. It must allow for savings.

7. Employ the services of companies that offer student loans and consolidations to keep all academic debt in one location for easy assessment and management.

8. There should be provision for future consolidation in the agreement.

9. The full terms of the contract or agreement should be properly and clearly stated and disclosed to you before you finally agree to it.

The company in question must give you a grace period whereby you can choose to pay back at a future date.

Consolidation makes the repayment process to be very easy and involves a slight increase in the interest rate. If you are one of those having problem in making payment, you can choose from the repayment terms options available for the federal loans income contingent payments. These terms were adjusted to compensate for a lower monthly income.

A graduated repayment provides lower payments during the first two years after graduation, while the extended repayment allows for extension of term of the loan without consolidation. However, each of these options increases the total amount of interest paid.

Finally, students' consolidation loan is beneficial to students' credit rating. However, not all federal student consolidation loan companies report their loan status to all credit bureaus. Also, this consolidation does not incur any fees for the borrower unlike the private sector debt consolidation. Private companies make money on student loan consolidation by reaping subsidies from the federal government.

For a better understanding of this subject matter, there are some factors you must consider when you want to select a service company. These factors as analyzed above must be borne in mind in your day to day activities. This will make you build on a very solid foundation as far as loan consolidation is concerned.

Tips For College Loans Rates For Consolidation

Tips For College Loans - Rates For Consolidation

While in college, most students do not have time to give much thought to how they are going to one day pay for their student loans. Instead, they are busy studying, figuring out which major to choose, getting a date, or going out and having fun.

Reality hits pretty hard on about 2-3 months after graduation, however. Soon, the grade period granted for most types of student loans is set to expire. The new college grad is now focusing on how to earn a living and build on his or her personal life. Then, the harsh reality of college loan repayment hits.

The actual payment amounts that the student is responsible for making is determined by the loan's interest rate and agreed-upon repayment period (which is often 5-15 years).

Meanwhile, the complexity of the repayment process is directly affected by one other thing: if the student has taken out multiple student loans. Having multiple loans means that some payments are due on the 1st, some on the 20th, etc. This is a pain to manage.

The Benefits Of College Loan Consolidation

If you are a grad who holds multiple college loans, you may be interested in consolidating your loans. Consolidating your loans comes with a number of benefits. The biggest benefit for most people is the ability to stretch out your repayment period over more time, such as going from 10 to 20 (or even 30) years.

Another benefit is that of simplifying one's life. By consolidating, you only have to make a single payment each month and only have to deal with one lender.

College Loan Rates For Consolidation: How They Are Calculated

The interest rate for federal consolidated loans is calculated as a weighted average of the interest rates of your existing loans, rounded up to the nearest 0.125% (with a maximum rate of 8.25%).

Meanwhile, the interest rate for private consolidated loans is calculated based upon some standard rate (like the prime rate) and your credit score. The rate you are offered will vary from lender to lender, so it pays to shop around.

Tips For Getting The Best Rate

For private student loan consolidation, the interest rate of your new loan could vary quite a bit. Here are some tips for getting yourself the best college loans rates for consolidation:

1. Check your credit score: Before contacting a private lender, research your credit score. For better or worse, your credit score will play a huge part in the rate you are offered (see above). Therefore, knowing your score ahead of time gives you the power of knowledge to help influence your negotiation.

2. Calculate your idea repayment period: Find an online loan calculator. Based upon the total amount you still owe on your existing college loans and your current (weighted) average interest rate, plug in different repayment periods (e.g., 10 years, 20 years, etc.) and see how they affect your payment amount. Caution: while lower monthly payments may be just what you need right now, remember that a longer repayment period will result in your loan costing you more in the long run.

3. Research rates with multiple lenders: Compile a list of at least 5-10 private college loan lenders. You can research them online. Write down the important information about each one, such as advertised rates, contact information, etc.

4. Apply to at least 5 lenders: Be sure to apply to at least 5 of the best lenders. You will be tempted to stop once you get your first offer, but following through and applying with all of them will greatly increase your chances of getting the best-possible offer.

Follow these tips to get the best interest rate for your loan consolidation.

Three Effective Tips for Private Student Loan Consolidation

Would it not be nice to take all your private student loans and wrap them into one loan. You can do that with private student loan consolidation lenders. Right now you are probably paying two or more lenders different amounts each month, on different days of the month, at different interest rates, and each with different pay off dates or maturities.

Roll It All Into One

Of course, this situation can be somewhat overwhelming. The cost in postage and stationery alone is enough to set you back. And two great big student loans can leave a hapless former student feeling somewhat hopeless. Never fear - student loan consolidation is here.

What Consolidating Does

By consolidating your private student loans, you can have one payment, one amount (probably with a sum much less than the two or more you are presently carrying), on one day of the month, at one interest rate, and with one maturity date. And, if you are not careful, you can have one big problem.

Three Effective Tips

Many variable come into play when considering what you need to do to get your student loans into a manageable form. If you are not prudent and careful, if you do not shop around for the best interest rates, the best repayment terms, the lowest administrative fees, you could be making moves that will cost your hundreds, perhaps thousands, over the cost of your new student consolidation loan. And that is not what you had in mind, is it?

Effective Tip One - Interest Rates

The first thing you need to do is go online and find a weighted interest rate calculator. This will give an average interest you are paying right now with your multiple private student loans. That weighted interest rate is what you want to aim for when you apply for a student loan consolidation.

If you can, try to get a rate lower than that calculated. Pay no attention to market rates, you want an interest at, or lower than, what you are now paying. If you hold your ground, your lender will come around. They want your business after all.

Effective Tip Two - Fees and Penalties

This is very important. Lenders tend to elide over these facts. You want to know if there are late fees and what is the cost. What about carrying fees and other administrative fees? Consolidation lenders should not ask for application fees, or credit check fees.

If they do, refuse them and find another consolidation lender. Policies vary widely from lender to lender so be sure you get the skinny on any incurring or recurring fees. Do not sign anything until you completely understand it.

Effective Tip Three - Marketing Promotions

Beware of incentives or marketing ploys the consolidation lender may be using to lure unsuspecting borrowers. All too often, fantastic interest rates, very easy initial payment terms, and other little trinkets are offered. After reading the fine print, you suddenly discover that you have signed a variable interest loan, the payment will double in the next year, and all sorts of other nasty terms become apparent. Remember, if it sounds to good to be true, it is not true. Consolidation can be a godsend, do not let it turn into a devil's dream.

Student Loans May Need Some Consolidation to Be Repaid

Beginning a professional career with crippling debt is not generally considered an ideal situation. But every year for tens of thousands of college graduates, that is exactly the situation they face thanks to the student loans they took out to get them through college.

College education does not come cheaply. In fact, statistics show that, over the last three decades, the cost of a college course has increased to a greater degree than the average income. That means that, even with inflation taken into account. the costs of college have skyrocketed.

Little wonder then than loans for students are considered a must by the vast majority of college goers. Not only that, but it is not unusual for a number of separate loans to be taken out over the four or five years spent in college.

In order to effectively manage these loans, it is advisable to get a student consolidation loan, which brings the individual debt together into one entity, thereby making the repayments more manageable. To some, this may seem an unnecessary step to take, but there are several reasons why it is the wisest tactic, and two in particular.

Helps Keep Good Credit

It is a little known fact that students loans cannot be written off in bankruptcy. In that regard, they are very different to any other loan, and the stigma of not repaying the loans tends to stick. The reason is that loans for students are given a significant period of grace, which effectively means that the lenders have lost money by the time of graduation. They therefore reserve the right for full payment.

Defaulting would mean a serious hit on the credit rating of a graduate, and understandably that places a lot of pressure on them once they have graduated from college. To avoid a harsh fate in a jobs market that is weak, a student consolidation loan is the most practical solution.

Helps Recover from Bad Credit

A second reason is that should a student already develop a bad credit rating, then it is imperative that the student loan is repaid if their credit rating is to recover. Unless a well paid job is found quickly, then this is not going to happen, leaving consolidation the only practical step to take. Every lender knows that students do not have any money, so in approving loans to students they accept a higher level of risk. However, when the time comes, they will expect repayments to begin.

What a student consolidation loan does, is allow a new loan to repay the old one, but crucially, a manageable repayment schedule for the new loan can be negotiated. It means that if a lender starts to demand repayments on the student loan of perhaps USD500 per month, then through consolidation that loan can be repaid in full, while the new loan can be repaid at a rate of perhaps USD350 per month.

The new rate means that the debt is much more manageable, and the original loan is cleared too. However, it must be pointed out that any bad credit that is developed will mean that the student consolidation loan will have a higher interest rate. Therefore, it is essential that a graduate does not delay in taking control of their student loan.

Student Loan Consolidations Companies Choosing The Best Loan Consolidation Lender

Student Loan Consolidations Companies - Choosing The Best Loan Consolidation Lender

Consolidating your student loans is a way of putting together all the loans you took from different lenders into the hands of a single student loan consolidation company.

How do you choose the best consolidation lender that will offer you the best repayment terms?

Choosing the wrong consolidation lender can cause a serious damage to your budget and general economy. It is very important to follow some guidelines to help you decide who can be your best consolidation company.

Private against federal.

If your original loans are from a federal source, you will look for a federal consolidation. Usually the federal loans are more convenient than the private ones due to the lower rates of interest.

On the other hand, if the loans to consolidate are from a private source, you will usually go for the private consolidation lender because the federal company will not offer you a good interest rate for consolidating private loans. The reason for choosing this way is that interest rates and terms vary for both.

Although some private lenders may offer you amounts that consolidate most of your debt, you should always go first for the federal company if most of the loans you need to consolidate are federal.

As a general rule, getting loans from the private consolidation lender means meeting more requirements than from the federal ones. Private lenders base their loans on creditworthiness and will be looking more at your credit score (if you have any) or the co-signer you present.

Interest rates.

Private lenders usually determine interest rates according to two factors: the standard rate (LIBOR) used for loans and your credit score. The higher your credit score the lower the interest rate that will be applied. You will try to find a consolidation lender that will offer the lowest interest rate possible. Also, interest rates can be fixed or variable. The first of course are to be preferred.

Federal lenders (not all federal lenders are offering consolidation loans now), on the other hand, calculate interest rate as the weighted average of the individual interest rates of the loans being consolidated.

Terms and conditions.

You will try to find a lender that offers you the best terms in relation to:

a) Loan Amounts. You will prefer those lenders that can offer you a loan that covers all your debt.

b) Fees, usually determined by your credit score. These are usually application fees and origination fees (fees applied to issue the loan).

c) Deferment or period of time between the moment you receive the loan and the moment you start repaying.

d) Repayment term or length of time to complete the repayment.

e) Whether co-signers are required.

Student Loan Consolidation Tips and Resources

Student loan consolidation can provide financial relief to graduates carrying multiple college loans. Graduates can consolidate both federal and private education loans to reduce interest rates and monthly payment amounts.

Most people use student loan consolidation to eliminate multiple payments. This can be particularly helpful for medical and law school graduates who often have six or more loans. Upon graduation, students must allocate funds to cover each installment as well as keep track of multiple payment dates. When post graduates submit late payments they are subjected to late fees and run the risk of damaging their credit rating.

There are several factors to consider when consolidating college tuition loans. It is a good idea to conduct research or work with a financial consultant to weigh the pros and cons of college loan consolidation. The Internet can be a good source for understanding the intricacies of consolidating loans, as well as to shop and compare lenders.

Students with both subsidized and unsubsidized loans will have different needs than graduates carrying one type of financing. Although subsidized and unsubsidized loans can be consolidated, lenders must consolidate the two using two separate loans in order to track payment transactions. However, borrowers will have one monthly payment and lenders contribute appropriate amounts to each account.

Graduates must meet lending criteria in order to consolidate federal student loans. Eligibility criteria involves having an adequate FICO score; paying three loan payments in full; being current on all loan payments; and waiting six months from the date of graduation before applying for a consolidation loan.

Post graduates with Sallie Mae financing must apply for consolidation loans through a conventional lender. At present, Sallie Mae is no longer participating in the federal loan consolidation program due to legislative cuts made by Congress.

Students with Sallie Mae education loans can obtain counseling with a repayment specialist to find out which refinancing options exist. Student loan payment program details are provided at SallieMae.com.

When borrowers consolidate education loans they must apply for a new loan to pay off outstanding student loans. Nearly all private and federal loans can be consolidated including: Perkins, Stafford, Direct, Guaranteed, and Health Professional.

The U.S. government offers a sponsored student loan consolidation program for graduates who obtained financing through Direct Loans. This program is a good choice for students with bad credit because applicants are not required to undergo credit checks. Program details are provided at LoanConsolidation.ed.gov.

Last, but not least, post graduates should research loan consolidation alternatives such as forbearance programs, tuition deferment, and student loan forgiveness. Debt forgiveness programs are available to graduates who hold degrees and obtain employment in public service fields such as education, medical and law. Loan consolidation alternatives are presented at CollegeScholarship.org.