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Debt consolidation loans – Money Advice Service, consolidation loans.#Consolidation #loans


Debt consolidation loans

Consolidating all your debts into one loan might appear to make life easier but there might be much better ways of dealing with debts. Find out more about how debt consolidation loans work, then get free debt advice before you make a decision.

What is a debt consolidation loan?

If you’ve got lots of different debts and you’re struggling to keep up with repayments, you can merge them together into one loan to lower your monthly payments.

You borrow enough money to pay off all your current debts and owe money to just one lender.

There are two types of debt consolidation loan:

  • Secured – where the amount you’ve borrowed is secured against an asset, usually your home. If you miss repayments, you could lose your home.
  • Unsecured – where the loan is not secured against your home or other assets.

Secured debt consolidation loans

Debt consolidation loans that are secured against your home are sometimes called homeowner loans.

You might be offered a secured loan if you owe a lot of money or if you have a poor credit history.

You should get free debt advice before you consider taking out a secured debt consolidation loan, as they’ll not be right for everyone and you could just be storing up trouble or putting off the inevitable.

When should you consider a debt consolidation loan?

Consolidating debts only makes sense if:

  • Any savings are not wiped out by fees and charges.
  • You can afford to keep up payments until the loan is repaid.
  • You use it as an opportunity to cut your spending and get back on track.
  • You end up paying less interest than you were paying before and the total amount payable is less (it could be more if you repay over a longer period).

Before you choose a debt consolidation loan think about anything that might happen in the future which could stop you keeping up with repayments.

For example, what if interest rates go up, or you fall ill or lose your job?

If you can’t stop spending on credit cards, for example because you’re using them to pay household bills, this is a sign of problem debt.

You should get free debt advice before taking out a debt consolidation loan.

Warning!

Always think about the potential downside of a secured loan. Your circumstances might change and your home could be at risk if you can’t keep up with repayments

When getting a debt consolidation loan doesn’t make sense

A debt consolidation loan definitely doesn’t make sense if:

  • You can’t afford the new loan payments
  • You don’t clear all your debts with the loan
  • You end up paying more overall (due to the monthly repayment being higher or the term of the agreement being longer), or
  • You really need help sorting out your debts rather than a new loan – a debt adviser might be able to negotiate with your creditors and arrange a repayment plan.

Debt consolidation loans that don’t put your home at risk

A better option might be a 0% or low-interest balance transfer card.

This is the cheapest way if you repay within the interest-free or low-interest period.

You’re likely to need a good credit rating though to get one of these cards.

You could also consolidate your debts into an unsecured personal loan, but again you’ll need a good credit rating to get the best deals.

Fees and charges for debt consolidation loans

Beware of the high fees some companies charge for arranging the loan.

  • Read the small print carefully for any extra fees or charges before you sign anything
  • Check whether there are any fees for paying off existing loans early as this could cancel out any savings you make
  • Avoid paying a fee for a company to arrange the loan on your behalf unless you’re getting advice (and you’re sure it’s worth the cost)

Debt Consolidation, Best Online Advice for personal loans, consolidation loans.#Consolidation #loans


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Consolidation loansWhat is loan consolidation?

Loan Consolidation is a process by which you take all your existing credit agreements and roll them into one loan. In order to reduce the total monthly payment, consumers often stretch it out over the longest period possible, typically 5 years or 60months.

One should take not of the fact that one is usually therefore swopping certain existing credit facilities like Credit Cards and overdrafts for a higher interest rate loan. Consolidation loans are therefore usually granted after the maximum credit facilities have been taken up, with affordability being the most common factor for declines. It is also very important to remember that the Credit Facilities, like credit cards and overdrafts, aren’t automatically closed when one transfers the payment received from the consolidation loan. Fees and account charges can easily keep the account active.

It is imperative that the consumer closes any accounts they are not using to avoid unnecessary debits. Download our eBook which contains valuable information on credit score.

Our Free Workshops

Consolidation loansWe currently do talks around financial wellness to the staff of financial institutions like ABSA and Nedbank, but also do employee financial wellness workplace talks at many other companies like Shell, Freddy Hirsch, Woolworths and Multichoice.

The reason for this is usually pretty clear to HR Payroll departments who often have also felt the debt burden of employees in the sense that these employees sometimes borrow money from fellow workers creating friction in the workplace.

They might also try to take on extra jobs on weekends or after hours in an attempt to make ends meet, and therefore come to work tired. At some companies’ employees try to cash in their pensions to pay off unsecured debt, or borrow against it, thereby negating the good advantage the company had in the marketplace by offering the pension in the first place. When creditors are ignored, it sometimes even leads to garnishee orders that impacts on the payroll department. Many companies in Financial services cannot employ staff with impaired credit records as staff cannot then retain things like FAIS accreditation which is one of the main reasons ABSA and Nedbank invite us to speak so regularly.

Minimum and Maximum period for repayment

Personal loans typically have a repayment period of between 2 and 5 years. This calculation is based on a repayment period of 5 years (60 months). Credit Life Insurance has been added in this calculation. Monthly account fee of R60 (excluding VAT) and an Annual Interest Rate of 28% (or current Bank Repurchase Rate plus 21%). This calculation is a no obligation, free assessment and is intended to provide you with the information you need for comparison purposes only. For shorter timeframes, credit facilities (like Credit Cards and Revolving Loans) are more suitable products to use.


Student Loan Payoff vs, student loan consolidation calculator.#Student #loan #consolidation #calculator


Student Loan Payoff vs. Invest Calculator

It’s an age-old question: Should you pay off your student loans or invest? The simplest answer is if your student loan debt has a higher interest rate than your expected return on investment, pay down your student loans first. If your investment earns a higher rate than your student loans will cost in interest, invest.

Many other variables, such as tax deductions and employer investment matching programs play into this equation. Use the Student Loan Payoff or Invest Calculator below to determine your repayment strategy.

Step 1: Current loan info

Student loan balance

Average interest rate

Current monthly payment

Step 2: Investment Info

Current retirement savings

Annual rate of return

Current monthly contribution

Years of contributions

Step 3: Extra

Monthly payment

On the other hand, if you decided to invest the extra $317 per month for , here are your results:

– yr years after you finish contributing. You can see the long term results below:

Student loan consolidation calculator

Student loan refinancing rates as low as % APR. Check your rate in 2 minutes.

Student Loan Payoff vs. Invest Calculator FAQs

1. Should I take the calculations from the Student Loan Payoff vs. Invest Calculator and apply them directly to my financial situation?

No. The calculations here are for estimation purposes only. It s important to note that this calculator in particular also factors in a lot of assumptions that may not hold true, such as annual expected return on investments as well as long-term tax rates. Additionally, there are other factors that this calculator cannot account for. As always, we recommend consulting a finance or tax professional when it comes to making your own financial decisions.

2. What value do I use for the Extra Money Payment Amount field?

This calculator assumes that you have extra money left over each month after you pay your monthly student loan bill. Enter the amount you have left over in the Extra Money Payment Amount, field. The calculator will then calculate where it may be best for you to apply this money (towards your student loans or an investment account).

If you do not have any money left over in your budget after paying your student loans, this calculator will not be helpful to you.

3. How do I make extra payments on my student loans and make sure the payments are applied correctly?

Check out this blog post to find out.

4. If I want to invest my money, how and where can I do that?

You can check out various investment options with our partners in the Student Loan Hero Marketplace.

  1. Prepaying student loans may be better than investing.
  2. Investing may be better than prepaying student loans.

FinAid, Loans, Student Loan Consolidation, direct loan consolidation.#Direct #loan #consolidation


direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidationDirect loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Direct loan consolidation

Student Loan Consolidation

Consolidation Loans combine several student or parent loans into one bigger loan from a single lender, which is then used to pay off the balances on the other loans. They also provide an opportunity for alternative repayment plans, making monthly payments more manageable.

Consolidation loans are available for most federal loans, including Stafford, PLUS and SLS, FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. Some lenders offer private consolidation loans for private education loans as well.

The interest rate on a consolidation loan is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8 of a percent. That interest rate is fixed for life.

For example, suppose a student has just unsubsidized Stafford Loans originated on or after July 1, 2006. These loans have a fixed interest rate of 6.8%. When they are consolidated by themselves, the consolidation loan will have an interest rate of 6 and 7/8ths of a percent, or 6.875%. So the interest rate increases only slightly.

If the borrower has a mix of loans with different interest rates, the weighted average will be somewhere in between. For example, if the borrower has $5,000 of Perkins Loans (at 5.0%) and $10,000 of unsubsidized Stafford Loans (at 3.86%), the weighted average is

This weighted average, 4.2%, is then rounded up to the nearest 1/8th of a percent, yielding a consolidation loan interest rate of 4.25%.

If you are consolidating loans with different interest rates, the weighted average interest rate will always be in between. Don’t be fooled if someone tries to suggest that this will save you money by getting you a lower interest rate. The interest rate may be lower than the highest of your interest rates, but it is also higher than the lowest of your interest rates. More importantly, the amount of interest you pay over the lifetime of the loan will be about the same.

No Cost to Consolidate

Aside from a slight increase in the interest rate on the consolidation loan, there is no cost to consolidate your loans. There are no fees to consolidate.

Under no circumstances pay a fee in advance to get a federal education loan or consolidate your federal education loans. There are no fees to consolidate your loans. While other federal education loans, such as the Stafford and PLUS loans, may charge some fees, the fees are always deducted from the disbursement check. There is never an upfront fee. If someone wants you to pay an upfront fee, chances are that it is an example of an advance fee loan scam.

Who Can Consolidate

Both student and parent borrowers can consolidate their education loans. Students and parents cannot combine their loans through consolidation, since only loans from the same borrower can be consolidated. But they can consolidate their loans separately.

Students can consolidate their education loans only during the grace period or after the loans enter repayment. Loans that are in default but with satisfactory repayment arrangements may also be consolidated. Students can no longer consolidate while they are still in school. Parents, however, can consolidate PLUS loans at any time.

Which Loans Can be Consolidated?

Any federal education loan can be consolidated. You can even consolidate a single loan. There are, however, a few restrictions on consolidating a consolidation loan.

You can consolidate a consolidation loan only once. In order to reconsolidate an existing consolidation loan, you must add loans that were not previously consolidated to the consolidation loan. You can also consolidate two consolidation loans together. But you cannot consolidate a single consolidation loan by itself.

Note that when you reconsolidate a consolidation loan, it does not relock the rates on the consolidation loan. The consolidation loan is treated as a fixed rate loan within the weighted average interest rate formula used to calculate the interest rate on the new consolidation loan.

Consolidation loans provide access to several alternate repayment plans besides standard ten-year repayment. These include extended repayment, graduated repayment, income contingent repayment (Direct Loans only) and income sensitive repayment (FFEL only). If you do not specify the repayment terms, you will receive standard ten-year repayment.

Consolidation loans often reduce the size of the monthly payment by extending the term of the loan beyond the 10-year repayment plan that is standard with federal loans. Depending on the loan amount, the term of the loan can be extended from 12 to 30 years. The reduced monthly payment may make the loan easier to repay for some borrowers. However, by extending the term of a loan the total amount of interest paid over the lifetime of the loan is increased.

You do not need to pick an alternate repayment plan. We recommend sticking with standard ten-year repayment, because it will save you money. The alternate repayment plans may have lower monthly payments, but this increases the term of the loan and the total interest paid over the lifetime of the loan.

Repayment on a consolidation loan will begin within 60 days of disbursement of the loan, unless the borrower qualifies for a deferment or forbearance.


School loan consolidation, school loan consolidation.#School #loan #consolidation


Welcome to Students.net

Welcome to students.net. This website provides you with information on all student related topics whether it is about choosing what you want to study, where you want to study, traveling or volunteer programs. Here is your one stop shop! We want to welcome high school, college and University students to this online student community.

Find below a short impression about the most popular and most visited topics of Students.net.

Student Services

Student services can take many forms. The greatest thing of being a student is the fact that there are a lot of institutions, organizations and people who are willing to facilitate you with all kinds of services. We covered the best student services in this section of the website. Every month we hook you up with the the best Student Deals. Also, now featured are the student credit cards, issued by Discover.

Student Tests

Take tests to find out more about what to study, your personality, or what would be your dream job for your future career.

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Best Student Loan Consolidation Programs for 2017 – Student Loan Consolidation Program Reviews, student loan consolidation rates.#Student #loan #consolidation #rates


Student Loan Consolidation Student loan consolidation rates

Whether you have federal student loans (such as Stafford, PLUS, or Federal Perkins loans) or private student loans, there are a number of student loan consolidation services that can help you consolidate your loans into one single debt. This can result in lower interest rates, and, in some cases, dramatically reduced monthly loan payments.

Many consolidation services offer fixed interest rates for the life of the loan, which can lock in your savings for years to come. This is good since consolidation loans typically have longer terms than other loans – usually anywhere from 10 to 30 years.

Continue reading below reviews

Student loan consolidation rates

Student Loan Consolidation Reviews

Student loan consolidation rates

Student loan consolidation rates

NATIONAL DEBT RELIEF Student loan consolidation rates

National Debt Relief is a leading provider of financial solutions, and they have an impressive range of options for both private and federal student loans. This company comes with a strong reputation, maintains a strong A rating from the Better Business Bureau, and offers a 100% money back guarantee with their plans. If you’re in the market to consolidate and better manage your student loans, National Debt Relief should be your first choice. Read More. Student loan consolidation rates

Student loan consolidation rates

Student loan consolidation rates

SoFi (which is pronounced SEW-fi , short for SOcial FInance ) is one of the most innovative resources available for both federal and private student loan consolidation. Their user-friendly website, including helpful articles to help students navigate the world of finance, makes it easy to understand all of your options. SoFi is also the only lender we found that offers unemployment protection, which may allow you to suspend your loan repayments for up to 12 months if you lose your job. SoFi should absolutely be on your short list for lenders if you’re looking to consolidate your student loans.

Student loan consolidation rates

Student loan consolidation rates

STUDENT LOAN CONSOLIDATOR

Student Loan Consolidator offers both federal and private student loan consolidation. They also offer special options, such as interest-rate reductions and interest-only payments. Additionally, they provide a toll-free number that enables you to contact loan counselors with any questions you might have. Read More. Student loan consolidation rates

Student loan consolidation rates

Student loan consolidation rates

LENDKEY

LendKey is an online provider of student loan consolidation services with strong customer reviews. Their ability to connect students with community banks and credit unions for both federal and private school loans makes them a good choice for most consumers, though occasional issues with the website may prove frustrating. Read More. Student loan consolidation rates

Student loan consolidation rates

Student loan consolidation rates

CHASE LOAN CONSOLIDATION

Chase is a leading financial services institution and one you can trust when it comes to federal student loan consolidation. Their online application is quick and easy, and you can find out whether you are eligible for their services within moments. Chase has a professional website that is easy to navigate and use. However, Chase does not quite offer the same level of service as our higher-rated selection. Read More. Student loan consolidation rates

Student loan consolidation rates

Student loan consolidation rates

WELLS FARGO LOAN CONSOLIDATION

Wells Fargo offers competitive loan consolidation for those who are consolidating only private student loans. They do not offer consolidation of Federal loans, which dropped them a bit in our ranking.

A recent study by the National Center for Education Statistics shows that half of all recent college graduates have an average student loan debt of $10,000. For some students, this amount is much higher. Many students receive loans from a variety of sources.

There are many advantages to consolidating all of these loans into a single debt. With interest rates at record lows, you will most likely receive a better rate by consolidating your loans now than when you first got your loans. The second advantage is reducing the number of creditors you have, which makes it easier to keep track of monthly loan payments. Consolidating your student loans into a single debt also simplifies the repayment process, making it less likely that you will default on your loan payments.

There are a number of services available to help you in this process. Some only offer federal student loan consolidation, while others enable you to consolidate both federal and private student loans. Therefore, it is important to make sure that the student loan consolidation service you choose meets your student loan consolidation needs.

Additionally, while some websites provide instant, online loan quotes, other websites do not. You will want to make sure that the service you select provides you with the information you need to make consolidation decisions.

There are a variety of issues to consider when looking for a student loan consolidation plan. Some of these include:

  • Information. Does the website provide adequate information to help you make student loan consolidation decisions?
  • Quality of Service. Does the website provide consolidation solutions that meet your needs?
  • Professionalism. Is the website professional and credible? Does the consolidation service have a strong reputation in the industry?

Student Loan Consolidation: Should I Consolidate My Student Loans, SoFi, student loan consolidation rates.#Student #loan #consolidation #rates


How and When to Combine Federal Student Loans Private Loans

Got student loans? We ve got you covered with our Student Loan Smarts blog series. Our expert tips and hacks will help you save money, pay off loans sooner and stress less about student loan debt. Read the other posts in the series here—and get all the info you need to make intelligent decisions about your student loans. And while you re at it, check out SoFi s new Student Loan Debt Navigator tool to assess your student loan repayment options.

One of the biggest student loan myths out there is that borrowers can’t consolidate federal student loans and private student loans into one loan. It’s understandable why people think that, since this wasn’t an option for many years. But now that the choice is available, it’s important to understand whether federal and private loan consolidation is right for you – especially when there’s the potential for significant cost savings on the line.

Can I Consolidate Federal and Private Student Loans?

While it’s not possible to use the federal Direct loan consolidation program to combine your federal student loans with private loans, it is possible to combine private and federal student loans by refinancing them with a private lender. Through this process, you actually apply for a new loan (which is used to pay off your original loans) and you’re given a new—ideally lower—interest rate.

Why would you want to do this? In addition to the advantages of loan consolidation (like having one, simplified monthly payment), refinancing student loans at a lower interest rate can mean big benefits, like lowering monthly payments or reducing the time it takes to pay off your debt, and cutting down on the total interest you pay over time.

When to Consolidate Federal Student Loans Private Loans

Before you refinance federal student loans, there are a couple of things to think about. Here’s an easy decision tree to help you understand whether refinancing federal loans is right for you:

Should I Refinance My Federal Student Loans?

Student loan consolidation rates

Federal Student Loan Interest Rates, Revealed

Some people assume that federal loans always offer the best rates, but this just isn’t true.

Depending on loan type and disbursement date, your federal student loan rate could range from about 3% to 8%. With prevailing interest rates at historic lows, some private lenders offer rates that are significantly better than a high-rate federal loan. This is particularly true for grad school borrowers who use unsubsidized Direct loans and Graduate PLUS loans to finance their education.

So how important is interest rate, really? Let’s compare a 10-year term, $80,000 loan at 6.84% (the current fixed rate on Grad PLUS loans) and 5.68% (the average 10-year fixed interest rate for SoFi refinance borrowers in 2015).*

In this example, refinancing would mean both lower monthly payments and a total savings of more than $5,600.

Understanding Federal Student Loan Benefits

Some federal student loans offer benefits and protections that do not transfer to private lenders. This is often the reason that people cite when they say you shouldn’t combine federal and private loans. But before you dismiss the idea of refinancing, you should first take a look to see if any of these benefits apply to you.

For example, under the Public Service Loan Forgiveness Program (PSLFP), your Direct Loan balance may be eligible for forgiveness after 120 payments if you’ve worked in the public sector that entire time. Similarly, the Teacher Loan Forgiveness Program is available for teachers who work in schools that serve low-income families full-time for five consecutive years. These are clearly great programs for people who choose careers in public service or education, but if that’s not you, they won’t do you any good.

There are also a number of federal loan repayment plans that can ease the burden for borrowers facing tough economic times. For example, the government’s Pay As You Earn (PAYE) and Income-Based Repayment (IBR) programs allow borrowers to make reduced monthly payments based on financial hardship. But if your income is over a certain threshold, you won’t benefit from these programs. And if you do qualify, but you’re at the high end of the spectrum, your slightly lowered payments may come at a disproportionate price in the form of accumulating interest.

It’s important to note that some private lenders offer their own benefits and protections. At SoFi, for example, if you lose your job, we’ll not only pause your payments, we’ll help you find a new one .

Federal Loan Refinance Recap

Combining federal student loans and private loans through the refinancing process won’t make sense for every borrower, but it provides great benefits for some. Now that you know it’s an option and you understand how it works, you can better assess whether it’s right for you.

* Click here to see student loan refinance examples that depict APR, monthly payment and total finance charges.

Editor’s Note: This is an updated version of a post we originally published in December 2013. We welcome new comments and questions below.

Student loan consolidation ratesStudent loan consolidation rates


Student Loan Consolidation, student loan consolidation rates.#Student #loan #consolidation #rates


Student Loan Consolidation

Student loan consolidation is a good option if you are having trouble paying your loans. You can consolidate just one loan, or several loans. You can consolidate loans even if you re already in default. In fact, consolidation is one good way to get out of default. (To learn about other ways to get out of default on student loans, see Student Loans: Getting Out of Default.)

A consolidation loan allows you to combine your federal student loans into a single loan with one monthly payment. This may be a good option if any of the following are true:

  • You can t afford the monthly payments on your federal student loans under any of the options described in Student Loan Repayment Options, and don t qualify for a postponement or for loan cancellation.
  • You qualify for some of the payment plans described in Student Loan Repayment Options, but you are so deep in debt that you still can t afford your monthly payments.
  • You can afford your monthly payments and intend to pay off your loans under a standard plan, but you want to refinance at a lower interest rate.
  • You are in default on one or more of your student loans and want to get out of default.

Eligibility for Student Loan Consolidation

The vast majority of federal loans are eligible for consolidation, including subsidized and unsubsidized Stafford loans (GSLs), Direct loans, Supplemental Loans for Students (SLSs), Perkins loans, FISLs, and (except in an IBR Plan Consolidation Loan) PLUS Loans. (To find out what type of loan you have, see Types of Federal Student Loans.)

All borrowers with these loans are eligible to consolidate after they graduate, leave school, or drop below half-time enrollment. However, because consolidation loans have no grace period while you are in school or for the six months afterwards (unlike nonconsolidation loans, which usually do have a grace period during this time), getting a such a loan may not be a good idea if you are still in school or just graduated and don’t yet have a job.

Restrictions

Tthere are some restrictions to loan consolidation. Private student loans cannot be included in a federal consolidation loan. In addition, spouses cannot consolidate their loans into a single consolidation loan. And, borrowers who are in default must meet certain requirements before they can consolidate.

Pros and Cons of Consolidation

Consider both the advantages and disadvantages of consolidation before obtaining a consolidation loan.

Disadvantages to Consolidation

Potential disadvantages include the possibility that, if you have old loans, consolidation will cause your interest rate to go up. Moreover, consolidation will extend the repayment period, which means that you will pay more interest over the life of your loan. Consolidation will not completely clean up your credit report, either. If you were in default, your report will reflect that your previous loans were in default but are now paid in full through the new loan.

In addition, your right to assert a school-related claim against the lender of the consolidation loan is not clear. That right might be important, for example, if you got a loan to attend a for-profit school because it lied about the likelihood of you getting a job after graduation. If you think you have a claim against the school, it is better to consult an attorney experienced in bringing these kinds of cases before you consolidate your loan.

To find an experienced student loan lawyer, visit Nolo’s Lawyer Directory.

Advantages to Consolidation

Loan consolidation offers some potential advantages, too. If you are in default on any of your government loans, consolidation may offer the opportunity to get out of default and make affordable monthly payments. When interest rates are low, consolidation gives you the advantage of locking in a low rate on your student loans.

Direct Consolidation Loan Program

As with the Direct Loan Program, the federal government provides Direct Consolidation Loans.

Direct Consolidation Loans come with flexible repayment options, including a standard plan, a graduated plan, and an extended plan, and in most circumstances an Income Contingent Repayment Plan (ICRP) or an Income Based Repayment Plan (IBR). To learn about these, see Student Loan Repayment Options.

If you are in default, a Direct Consolidation Loan is a good way to get out of default and obtain a repayment plan that you can afford. In order to get out of default through a Direct Consolidation Loan, you must make three affordable monthly payments to the loan holder first (which can be as low as $5) or agree to an ICRP or IBR on the consolidated loan. Borrowers are also eligible for deferments in certain circumstances.

Each loan consolidated under the program keeps its interest subsidy benefit. This can be important if you return to school.

To qualify for a Direct Consolidation Loan, you must have at least one Direct loan or FFEL. So, if you have only a Perkins loan, for example, you don t qualify. If you have at least one FFEL, but no Direct loans, then you must certify you are unable to obtain a FFEL with an Income Sensitive Repayment Plan acceptable to you and are eligible for an Income Contingent Repayment Plan. As of 2010, there are no more FFEL Consolidation loans available, so the requirement that you cannot get one may be moot.

For more information on Direct Consolidation Loans and to get an application for loan consolidation, go to http://loanconsolidation.ed.gov/index.html.

Reconsolidation

The circumstances under which you can consolidate a loan or loans that have already been consolidated are limited. Here are some examples of when you can reconsolidate a student loan:

  • If you apply within 180 days after you get a consolidation loan, you can add another loan (either a new or existing loan) into that consolidation loan.
  • You can get a new consolidation loan to combine an existing consolidation loan and another student loan you got either before or after you got the original consolidation loan.
  • You can consolidate two existing consolidation loans.
  • FFEL Consolidation Loan borrowers may also convert a FFEL Consolidation Loan into a Direct Consolidation Loan, without having to add any additional loan, in order to obtain an Income Contingent or Income Based Repayment Plan, but only if the lender submitted the loan to the guaranty agency to help the borrower avoid default.

To learn about student loan repayment options, getting out of default, and more, see Nolo’s Student Loan Debt area.


Student Loan Consolidation, federal student loan consolidation.#Federal #student #loan #consolidation


Student Loan Consolidation

Student loan consolidation is a good option if you are having trouble paying your loans. You can consolidate just one loan, or several loans. You can consolidate loans even if you re already in default. In fact, consolidation is one good way to get out of default. (To learn about other ways to get out of default on student loans, see Student Loans: Getting Out of Default.)

A consolidation loan allows you to combine your federal student loans into a single loan with one monthly payment. This may be a good option if any of the following are true:

  • You can t afford the monthly payments on your federal student loans under any of the options described in Student Loan Repayment Options, and don t qualify for a postponement or for loan cancellation.
  • You qualify for some of the payment plans described in Student Loan Repayment Options, but you are so deep in debt that you still can t afford your monthly payments.
  • You can afford your monthly payments and intend to pay off your loans under a standard plan, but you want to refinance at a lower interest rate.
  • You are in default on one or more of your student loans and want to get out of default.

Eligibility for Student Loan Consolidation

The vast majority of federal loans are eligible for consolidation, including subsidized and unsubsidized Stafford loans (GSLs), Direct loans, Supplemental Loans for Students (SLSs), Perkins loans, FISLs, and (except in an IBR Plan Consolidation Loan) PLUS Loans. (To find out what type of loan you have, see Types of Federal Student Loans.)

All borrowers with these loans are eligible to consolidate after they graduate, leave school, or drop below half-time enrollment. However, because consolidation loans have no grace period while you are in school or for the six months afterwards (unlike nonconsolidation loans, which usually do have a grace period during this time), getting a such a loan may not be a good idea if you are still in school or just graduated and don’t yet have a job.

Restrictions

Tthere are some restrictions to loan consolidation. Private student loans cannot be included in a federal consolidation loan. In addition, spouses cannot consolidate their loans into a single consolidation loan. And, borrowers who are in default must meet certain requirements before they can consolidate.

Pros and Cons of Consolidation

Consider both the advantages and disadvantages of consolidation before obtaining a consolidation loan.

Disadvantages to Consolidation

Potential disadvantages include the possibility that, if you have old loans, consolidation will cause your interest rate to go up. Moreover, consolidation will extend the repayment period, which means that you will pay more interest over the life of your loan. Consolidation will not completely clean up your credit report, either. If you were in default, your report will reflect that your previous loans were in default but are now paid in full through the new loan.

In addition, your right to assert a school-related claim against the lender of the consolidation loan is not clear. That right might be important, for example, if you got a loan to attend a for-profit school because it lied about the likelihood of you getting a job after graduation. If you think you have a claim against the school, it is better to consult an attorney experienced in bringing these kinds of cases before you consolidate your loan.

To find an experienced student loan lawyer, visit Nolo’s Lawyer Directory.

Advantages to Consolidation

Loan consolidation offers some potential advantages, too. If you are in default on any of your government loans, consolidation may offer the opportunity to get out of default and make affordable monthly payments. When interest rates are low, consolidation gives you the advantage of locking in a low rate on your student loans.

Direct Consolidation Loan Program

As with the Direct Loan Program, the federal government provides Direct Consolidation Loans.

Direct Consolidation Loans come with flexible repayment options, including a standard plan, a graduated plan, and an extended plan, and in most circumstances an Income Contingent Repayment Plan (ICRP) or an Income Based Repayment Plan (IBR). To learn about these, see Student Loan Repayment Options.

If you are in default, a Direct Consolidation Loan is a good way to get out of default and obtain a repayment plan that you can afford. In order to get out of default through a Direct Consolidation Loan, you must make three affordable monthly payments to the loan holder first (which can be as low as $5) or agree to an ICRP or IBR on the consolidated loan. Borrowers are also eligible for deferments in certain circumstances.

Each loan consolidated under the program keeps its interest subsidy benefit. This can be important if you return to school.

To qualify for a Direct Consolidation Loan, you must have at least one Direct loan or FFEL. So, if you have only a Perkins loan, for example, you don t qualify. If you have at least one FFEL, but no Direct loans, then you must certify you are unable to obtain a FFEL with an Income Sensitive Repayment Plan acceptable to you and are eligible for an Income Contingent Repayment Plan. As of 2010, there are no more FFEL Consolidation loans available, so the requirement that you cannot get one may be moot.

For more information on Direct Consolidation Loans and to get an application for loan consolidation, go to http://loanconsolidation.ed.gov/index.html.

Reconsolidation

The circumstances under which you can consolidate a loan or loans that have already been consolidated are limited. Here are some examples of when you can reconsolidate a student loan:

  • If you apply within 180 days after you get a consolidation loan, you can add another loan (either a new or existing loan) into that consolidation loan.
  • You can get a new consolidation loan to combine an existing consolidation loan and another student loan you got either before or after you got the original consolidation loan.
  • You can consolidate two existing consolidation loans.
  • FFEL Consolidation Loan borrowers may also convert a FFEL Consolidation Loan into a Direct Consolidation Loan, without having to add any additional loan, in order to obtain an Income Contingent or Income Based Repayment Plan, but only if the lender submitted the loan to the guaranty agency to help the borrower avoid default.

To learn about student loan repayment options, getting out of default, and more, see Nolo’s Student Loan Debt area.


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federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidationFederal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Federal student loan consolidation

Student Loan Consolidation

Consolidation Loans combine several student or parent loans into one bigger loan from a single lender, which is then used to pay off the balances on the other loans. They also provide an opportunity for alternative repayment plans, making monthly payments more manageable.

Consolidation loans are available for most federal loans, including Stafford, PLUS and SLS, FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. Some lenders offer private consolidation loans for private education loans as well.

The interest rate on a consolidation loan is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8 of a percent. That interest rate is fixed for life.

For example, suppose a student has just unsubsidized Stafford Loans originated on or after July 1, 2006. These loans have a fixed interest rate of 6.8%. When they are consolidated by themselves, the consolidation loan will have an interest rate of 6 and 7/8ths of a percent, or 6.875%. So the interest rate increases only slightly.

If the borrower has a mix of loans with different interest rates, the weighted average will be somewhere in between. For example, if the borrower has $5,000 of Perkins Loans (at 5.0%) and $10,000 of unsubsidized Stafford Loans (at 3.86%), the weighted average is

This weighted average, 4.2%, is then rounded up to the nearest 1/8th of a percent, yielding a consolidation loan interest rate of 4.25%.

If you are consolidating loans with different interest rates, the weighted average interest rate will always be in between. Don’t be fooled if someone tries to suggest that this will save you money by getting you a lower interest rate. The interest rate may be lower than the highest of your interest rates, but it is also higher than the lowest of your interest rates. More importantly, the amount of interest you pay over the lifetime of the loan will be about the same.

No Cost to Consolidate

Aside from a slight increase in the interest rate on the consolidation loan, there is no cost to consolidate your loans. There are no fees to consolidate.

Under no circumstances pay a fee in advance to get a federal education loan or consolidate your federal education loans. There are no fees to consolidate your loans. While other federal education loans, such as the Stafford and PLUS loans, may charge some fees, the fees are always deducted from the disbursement check. There is never an upfront fee. If someone wants you to pay an upfront fee, chances are that it is an example of an advance fee loan scam.

Who Can Consolidate

Both student and parent borrowers can consolidate their education loans. Students and parents cannot combine their loans through consolidation, since only loans from the same borrower can be consolidated. But they can consolidate their loans separately.

Students can consolidate their education loans only during the grace period or after the loans enter repayment. Loans that are in default but with satisfactory repayment arrangements may also be consolidated. Students can no longer consolidate while they are still in school. Parents, however, can consolidate PLUS loans at any time.

Which Loans Can be Consolidated?

Any federal education loan can be consolidated. You can even consolidate a single loan. There are, however, a few restrictions on consolidating a consolidation loan.

You can consolidate a consolidation loan only once. In order to reconsolidate an existing consolidation loan, you must add loans that were not previously consolidated to the consolidation loan. You can also consolidate two consolidation loans together. But you cannot consolidate a single consolidation loan by itself.

Note that when you reconsolidate a consolidation loan, it does not relock the rates on the consolidation loan. The consolidation loan is treated as a fixed rate loan within the weighted average interest rate formula used to calculate the interest rate on the new consolidation loan.

Consolidation loans provide access to several alternate repayment plans besides standard ten-year repayment. These include extended repayment, graduated repayment, income contingent repayment (Direct Loans only) and income sensitive repayment (FFEL only). If you do not specify the repayment terms, you will receive standard ten-year repayment.

Consolidation loans often reduce the size of the monthly payment by extending the term of the loan beyond the 10-year repayment plan that is standard with federal loans. Depending on the loan amount, the term of the loan can be extended from 12 to 30 years. The reduced monthly payment may make the loan easier to repay for some borrowers. However, by extending the term of a loan the total amount of interest paid over the lifetime of the loan is increased.

You do not need to pick an alternate repayment plan. We recommend sticking with standard ten-year repayment, because it will save you money. The alternate repayment plans may have lower monthly payments, but this increases the term of the loan and the total interest paid over the lifetime of the loan.

Repayment on a consolidation loan will begin within 60 days of disbursement of the loan, unless the borrower qualifies for a deferment or forbearance.