Reasons Not to Consolidate Your Student Loans

When you consolidate your student loans you get significantly lower monthly payment fees and your monthly interest rates are also lowered. When these are a great help in managing your monthly budget, there are also disadvantages to consolidating your debts.What are the cons of college loan debts consolidation?You will end up paying for more than the overall cost of your loans. Why is this? When you consolidate your student loans your repayment term is extended so that your monthly payment and interest rate are lowered. But if you sum it up, you will actually be spending more instead of saving, and if your repayment term extends up to 30 years, imagine how much you will be losing.There are also some helpful borrower’s benefits that you might lose if you consolidate. These benefits include interest rate discounts and rebates. Federal loans can allow you to apply for payment deferment in case you decide to go back to school or loan forbearance if you encounter economic hardships. These benefits could be lost if you consolidate especially to a private lender.Since debt consolidation interest rate is the weighted average of your various loan rates, there is a possibility you’ll end up paying for a higher rate than if you pay your loans separately. This happens if you consolidate a high rate loan with other low rate loans.Consolidate your student loans only if you don’t have any other options. If you have mostly federal loans, check with your lender of college if you qualify for loan forgiveness. This is possible if you can work as a teacher, doctor or lawyer in low income areas in the U.S. If you belong to other professions, then perhaps you can do volunteer work for the Peace Corps or Americorps to lessen your college debts.

Federal Perkins Student Loans

Federal Perkins Loans are low interest government loans made through a participating school to undergraduate and graduate students with substantial financial need.In order to qualify for a Perkins student loan, a student’s Expected Family Contribution (EFC) as determined by the government’s FAFSA (Free Application for Federal Student Aid) must demonstrate the greatest level of financial need.Recipients of Federal Pell Grants receive priority for Perkins Loans.Apply for Your Perkins Student Loan EarlyWhen applying for financial aid, it’s important to note that schools distribute Perkins Loans on behalf of the government, and when the funds are gone, the funds are GONE.This means that even if you qualify for a Perkins Loan you may not actually get one. So with interest rates steady at 5%, it’s in your best interest to submit your FAFSA on January 1 or as close to that date as possible. This will ensure that you get the maximum amount of Perkins Loan funds you are entitled to.Perkins AmountsThe maximum amount for a Federal Perkins Loan made to an undergraduate student is $4000 per year, up to a total of $20,000 over the course of an undergraduate program.For graduate students, the maximums are higher, at $6,000 per year and $40,000 over the course of graduate studies.How the Government Helps You Pay Back Your Perkins LoanThe federal government subsidizes all Perkins Loans. So while you are in school, and while the loan is in any type of deferment period, the federal government picks up the tab for the interest.This can save you thousands of dollars in interest when you eventually repay your loan. An example follows:Say an undergraduate student is able to take the maximum Perkins Loan amount of $4,000 each year at 5% interest. The government will pay the student’s interest on the first loan for over fours years (four school years plus a six month grace period), over three years on the second loan, over two years on the third loan and over a year on the fourth loan.This would equate to more than $2,000 in interest payments that you don’t have to make. That’s like getting an extra two thousand dollars free to pay for your schooling!Eligibility RequirementsIn addition to your EFC score, eligibility requirements for the Federal Perkins Loan are as follows. You must:* Be a United States citizen or an eligible non-citizen with a valid social security number* Demonstrate exceptional financial need* Be working toward a degree or certificate in an eligible program* Have a high school diploma, GED or pass an approved ability-to-benefit (ABT) test* Register with the Selective Service if you’re a male between 18 and 25* Maintain satisfactory academic progressThe Benefits of a Perkins LoanEvery year billions of dollars are awarded to students in federal student aid.The federal government offers many different types of student loans such as Subsidized and Unsubsidized Stafford Loans, as well as the PLUS Loan to parents to help their student pay for school.One of the most popular federal student loans is the Federal Perkins Loan, which is a low interest government loan that is offered to students who exhibit financial need.I highly suggest a Perkins Student Loan for three main reasons:1) You don’t need a cosigner -This is a great first loan to get on your own because you don’t need a cosigner to extend their good credit to you to get it.2) You can have bad credit or no credit -Since you most likely have no established credit, or you may have bad credit from previous credit card charges, you are still eligible to receive a Federal Perkins Loan.3) The government pays your interest – This is the most appealing and money-saving benefit of the Federal Perkins Loan. The federal government subsidizes all Perkins Loans, so as long as you are enrolled at least half-time in a degree program, and while the loan is in any type of deferment period, the federal government picks up the tab for the interest. You will end up saving thousands of dollars in interest once you finally start to pay back your loan.If you’re offered a Perkins Loan, you’d be wise to take the full amount you are eligible for. With a low interest rate of 5%, a Stafford Loan, private loan or any other loan product won’t be able to compete.Since a Perkins Loan will most likely not satisfy all of your student aid needs, you can apply for other federal student loan products, like a Subsidized Stafford Loan or an Unsubsidized Stafford Loan.If you’re still coming up short after you’ve exhausted your federal aid resources, you should seek out a Private or Alternative Loan source.

Student Loan Debt Consolidation – An Overview Of Federal Loans

Though there are no deadlines in federal loan consolidation programs, there are certain things to keep in mind:o Your loans have to be fully disbursed to be eligible for Federal Consolidation Loan program.o You are no longer enrolled in school.o You are actively repaying your loan (including deferment or forbearance), or are in your six-month post-graduate grace period.o Your minimum consolidated loan amount is $10,000.The best time to go for student loan debt consolidation of your federal student loans is when you still are in your grace period, because of the in-school lower rate of interest.Every student has his or her reasons for going in for student loan debt consolidation, and so would you. Look at some of the reasons why you should go for student loan debt consolidation of your federal student loans:o Fixed rates of interesto Lower monthly paymentso Payment incentives that saves you moneyo Single payment each month in place of multiple payments to different loan issuers.o New or renewed defermentsYou will need the following information when applying for your student loan debt consolidation of your federal student loans:o The balances and interest rates of your current eligible federal student loans.o The names and addresses of the companies that hold or service your federal student loans. These are the companies that handle billing, collections, deferments, etc. of your federal student loans.o The names and addresses of two personal references in the United States.Student loan debt consolidation of federal student loans have a fixed rate of interest. The fixed rate is calculated by the weighted average of the interest rates of the individual loans being consolidated. These are rounded up to the nearest 1/8 of a percent, up to the maximum of 8.25 percent.

Consolidating Your Government College Loans – Pros and Cons

Consolidating your government college loans can be both an advantage and a disadvantage. Are you thinking of combining your loan debts for a better repayment process?The fact that you’re trying to look for the best way to pay off your debt is a good thing. However you have to make sure that your decision is the right one for your current situation because this also has a huge impact to your future.What are the benefits of consolidating your government college loans?1. Your federal interest rate is lowered2. You can extend your repayment term3. You can choose from different repayment plans including Standard, Extended and Graduated plans4. You get to pay only one loan every month5. You don’t have to pay a fee when consolidating federal loans6. No credit checks and pre-payment fees7. It is much simpler to apply for federal consolidation than private bank consolidationWhat are the disadvantages of consolidating your government college loans?1. Consolidation will void special borrowers’ benefits if you have a Perkins Loan.2. Consolidating your debts will void the six month grace period. You will be required to repay immediately.3. If you have accumulated a large amount of loan debts, you may end up paying thousands of dollars more than the original amount of your loans. This is because of the extended repayment period. The longer you repay your debts, the more you pay in terms of interest.4. If you have paid most of your loan already, there is no sense in consolidating your debts. You are better off paying your debts the same way you’re doing it.

Student Loan Debt Consolidation – An Overview Of Federal Loans

Though there are no deadlines in federal loan consolidation programs, there are certain things to keep in mind:o Your loans have to be fully disbursed to be eligible for Federal Consolidation Loan program.o You are no longer enrolled in school.o You are actively repaying your loan (including deferment or forbearance), or are in your six-month post-graduate grace period.o Your minimum consolidated loan amount is $10,000.The best time to go for student loan debt consolidation of your federal student loans is when you still are in your grace period, because of the in-school lower rate of interest.Every student has his or her reasons for going in for student loan debt consolidation, and so would you. Look at some of the reasons why you should go for student loan debt consolidation of your federal student loans:o Fixed rates of interesto Lower monthly paymentso Payment incentives that saves you moneyo Single payment each month in place of multiple payments to different loan issuers.o New or renewed defermentsYou will need the following information when applying for your student loan debt consolidation of your federal student loans:o The balances and interest rates of your current eligible federal student loans.o The names and addresses of the companies that hold or service your federal student loans. These are the companies that handle billing, collections, deferments, etc. of your federal student loans.o The names and addresses of two personal references in the United States.Student loan debt consolidation of federal student loans have a fixed rate of interest. The fixed rate is calculated by the weighted average of the interest rates of the individual loans being consolidated. These are rounded up to the nearest 1/8 of a percent, up to the maximum of 8.25 percent.

College Student Loans – Save Time and Money

No days, college education is costlier then ever and a lot of students are in the situation of trying to figure out how they can afford the never ending rise in education expenses. So many turn to college student loans to aid them in their pursuit to a higher education if they are unable to support themselves through there own means.College student loans relieve the pressure off students for coming up with sources to fund there education. The government itself has made the terms easier for most eligible student. These loans that the government provides are known as Federal Student Loans. To many, these loans are very attractive due to the low fixed interest rate that comes along with it. The rate usually sits around 5% and the student is not obligated to start repaying the debt until after the grace period. The grace period usually is a amount of time, such as 9 months, after the student has graduated or fell below the half time status at there school. For a student to be approved for this type of loan, the individual must apply for Federal Student Aid, better known as the FAFSA form. This can also be completed online for faster convenience.Stafford student loans can also be acquired. These types of college student loans come in two categories.1.Subsidized2.UnsubsidizedWith the subsidized option, the rate of interest will be a little higher and the period for payment starts 6 months after instead of 9 months. With the unsubsidized option, there is no grace period and the amount of interest you have to pay starts building up the day the loan is issued to the student. Provided this, the unsubsidized loan is more simple to get qualified and approved for. The amount that the parents can borrow from the unsubsidized loan is also higher. It also comes with a higher rate of interest.Loans can also be available for students that have different interest of studies. Business students can apply for loans that provide loans directly for business students. The specifics of the loan can also be a better option due to the target they are designed for. College student loans can also be acquired from private lenders such as banks and other fund institutions. With a variety of loans out their, the student can have a relative large selection. The student must also take responsibility to also find the best loan for their situation and needs.

Student Loans and the Financial Crisis

With the financial crisis nowhere in sight to get better would eventually hurt or jeopardize how you can borrow money for your education. Student loans from some sectors would feel the effects of this global financial crisis. With the ongoing finance and economic crisis and the Federal Reserve pumping out billions or probably trillions of dollars into Wall Street, it is bound to affect student loans and how you can borrow money for your education. The financial sector was hit the hardest since the mortgage collapse and money going in or out of these financial institutions is out of the normal.The crisis or the recession started with the housing and mortgage collapse leaving many people to file for foreclosures and bad mortgage loans. You really do not need to be a rocket scientist to know that the effects are paramount and gargantuan in scope. It affects the entire world. And to avert further crisis and get the big finance companies afloat the federal reserve infused an initial seven hundred billion dollars to stave off a nose diving economy. The US government address the crisis by enacting a bail out for the troubled banks and finance companies.Because these banks are the issuer of most of these student loans it may have some ramifications. The banks that are in trouble are the ones doling out these student and educational loans to students. So there is the potential that this could affect how you can obtain student loans for your books and tuition fees. But luckily for some, there is good news as the Stafford Loans under this program will not be affected because it is guaranteed by the governments education department. This is welcome news as most people and parents who wanted to borrow money for their children to go to college will not be affected.But some other forms of educational borrowing may get affected as these banks are having more stringent policies on who can apply and qualify. One case in point is those foreign students who may have a hard time with their budget and cash flows. The rising cost of fuel and food make it harder for foreigners to cope money wise.In some parts of the world the financial crisis does have some effects on student loans. For instance, in Canada they have a program called CanHelp which is a financial aid group that helps Canadians who would like to obtain college loan. The problem with CanHelp is that it is backed by the troubled bank Wachovia Corporation from North Carolina. This bank was eventually taken by Wells Fargo. Needless to say the funds that was flowing to this program suddenly stops. So you can see that this financial crisis has effects on student loans.On the brighter side of things, the US congress enacted the Ensuring Continued Access to Student Loans Act of 2008. This will effectively protect many families to have access to federal student loans during this economic and financial chaos. This would make all these families and students seeking educational financing more at ease. It also means that you can have access to federal loans without worrying about any impediments and hassles. You have to be aware though that federal loans like Perkins, Stafford and PLUS loans are capped so you need some borrowings from private lenders.

Student Loan Debt Consolidation – An Overview Of Federal Loans

Though there are no deadlines in federal loan consolidation programs, there are certain things to keep in mind:o Your loans have to be fully disbursed to be eligible for Federal Consolidation Loan program.o You are no longer enrolled in school.o You are actively repaying your loan (including deferment or forbearance), or are in your six-month post-graduate grace period.o Your minimum consolidated loan amount is $10,000.The best time to go for student loan debt consolidation of your federal student loans is when you still are in your grace period, because of the in-school lower rate of interest.Every student has his or her reasons for going in for student loan debt consolidation, and so would you. Look at some of the reasons why you should go for student loan debt consolidation of your federal student loans:o Fixed rates of interesto Lower monthly paymentso Payment incentives that saves you moneyo Single payment each month in place of multiple payments to different loan issuers.o New or renewed defermentsYou will need the following information when applying for your student loan debt consolidation of your federal student loans:o The balances and interest rates of your current eligible federal student loans.o The names and addresses of the companies that hold or service your federal student loans. These are the companies that handle billing, collections, deferments, etc. of your federal student loans.o The names and addresses of two personal references in the United States.Student loan debt consolidation of federal student loans have a fixed rate of interest. The fixed rate is calculated by the weighted average of the interest rates of the individual loans being consolidated. These are rounded up to the nearest 1/8 of a percent, up to the maximum of 8.25 percent.

Financing College Expenses With Student Loans or With Credit Cards?

But what happens when you won’t have enough money by the next month to pay the whole balance? Or, in other words, what if you need finance to make ends meet? Is a credit card the best source of finance or are there other options that you can turn to if you need funds to cover your expenses?All these questions will be answered in the following paragraphs. What we want to make students understand is that finance is a serious issue that should be well thought. Rushing in and choosing the easiest path can lead to unfortunate consequences that can easily be avoided by doing a bit of research and making conscious decisions.Other Finance Sources The truth is that when it comes to students, lenders are more flexible and a student will be able to get finance at low interest rates without too much hassle as long as he is willing to go through the process of applying for a loan.Many people feel that using a credit card and getting finance through it is not borrowing money, but it is. There is no difference between that and applying for a loan. So, given that either way you’ll owe someone money, you might as well borrow money with a lower interest rate.Federal Loans carry the lowest interest rates when it comes to student loans. The interest rate charged for a federal loan is usually below 6%. Another benefit that comes with this kind of loans is that the repayment is deferred till graduation. Moreover, you can sometimes agree a deferment of up to a year after graduation.Regular loans on the other hand carry somewhat higher interest rates but nevertheless lower than other unsecured personal loans. Repayment can also be deferred and payment schedules can last longer than federal loans. Also, private loans provide higher loan amounts than federal loans.Credit Cards If you choose to finance yourself with credit cards, you must understand that costs will be a lot higher. Unless you always pay your balance in full (in which case you wouldn’t be financing) the interest rate you’ll be charged for credit will be as high as 20%, let alone other charges and fees like insurance, issuing costs, etc.Not only is the interest rate a lot higher, but it is also not fixed. So variations in market conditions may increase the interest rate charged and you’ll end up paying a lot more than you expected. Besides you cannot defer payment, you’ll have to begin to pay for your purchases the following month. And if you choose to pay the minimum you’ll end up accumulating debt which is a dangerous thing to do as the minimum will increase every month and you’ll end up being unable to pay your credit card balance.

Typical Terms of Student Loan Repayment

There are many different things that you should know when you are coming to the time of student loan repayment. You might be able to find a program that fits your needs and allows for your repayment terms to fit smoothly into your budget. In today’s poor economy it is no wonder that people are feeling the pain of bills harder than in the previous years. There are many people who are out of work and unable to find jobs. For those who have jobs there are cutbacks, layoffs, lower salaries, no overtime, no raises and many other things to consider. Even those who are living on Social Security have lost their cost of living increase and the sad thing is that the cost of living continues to increase. When you graduate from college you are full of hope and wonder of the world that you are entering into. By the time that you have come to terms with life you will begin your student loan repayment. This could really be a problem for you based on the number of student loans that you have and the amount of money that you owe in student loans. There are many different types of loans and many different options for repayment for you to consider.There are three basic types of loans. These include the loans that are made by both, the bank and the federal government, those loans that are made by your school, and the loans that are available from private financial lenders. Since there are so many different types of loans there are also many different forms of repayment.With federal loans you have several different repayment options. One of these options is that you can simply pay the loans as you had agreed when you first got the loans. In the standard repayment format you will repay your loans in just ten years. Depending on how much money you have borrowed this could result in quite a hefty monthly payment. So if you are unable to meet these payment requirements then you can typically extend your term up to twenty five years. A third option is to settle with a plan where your payments start off low during the beginning of your career with your payments increasing over time or rising when your income rises. This one actually works both ways as payments are lower if your income becomes less. Another great options is to consider consolidation as all federal loans can easily be consolidated. There are only specified time periods when you will be allowed consolidation so it is a good idea to know ahead of time whether or not this is something that you want to consider.If you should happen to have a problem and lose your employment or become ill there are options available for you as well. You can temporarily postpone your repayment. A deferment is where you postpone your payments for a specified amount of time while you are allowed to become more financially stable and to get back on your feet after some type of hardship. What is so great about this program is that although you see your loan amount go up while interest is added you are able to avoid having to struggle to make these payments as they are suspended. There are even some rare circumstances where your student loans might be canceled.