You’ve got to take on student loan debt these days if you want to go to college unless you are very lucky. Student loan debt is like any debt. The key to how quickly you can pay it off often comes down to the interest rates. For people with federal loans, the good news is interest rates are quirky in a positive way.The economic condition of the United States is supposedly in a recovery from the Great Recession we recently suffered. With business slow and unemployment in double digits, it is hard to make much of an argument that this recovery has really hit most of us. As we stagger forward, things will improve slowly, but a fiscal accounting must take place. That accounting is going to come in the form of higher interest rates.We have interest rates that are so low now that we’ve rarely seen such an economic condition in our history. The Federal Reserve essentially is loaning out money to banks at a zero interest rate. That can’t last. When it changes, rates are going to move up and so are your debt loads. For those with fixed rate loans, the news will mean little since rates will stay the same on the debt in question. For those with adjustable rates, things are going to get ugly.What about federal student loans? Well, I have really good news if you are carrying federal student loan debt. The rates on your loan are not set by the market or some cold bank per se. Instead, Congress actually sets the rates on your loans. The legislative body actually sets a range of rates that can be charged for each loan, but the banks actually issuing the money always [and I mean always!] go with the highest possible allowed rate. The rates can change year to year, but are usually much lower than private loans and such. You can access the current rates for Perkins, Stafford and PLUS loans at the website for the Department of Education.Like all debt, the interest rates on student loans are going to be going up in the next few years as the Federal Reserve raises rates in general. If you have federal loans, you can expect the pain of these increases to be much smaller than with private loans.
It is a blessing for a student if he can make an easy and regular payments of his student loans; this only means his road to pursuing his college degree can be done with a lot less stress and hindrances. However, this is not usually the case for many borrowers. More often than not, monthly installments are not paid late, if not paid at all. Hence, with the number of loans that a borrower has to worry about every month, he has to decide fast and just get a student loan consolidation to take care of his financial woes. Consolidation means merging the old loans, turning them into one cheap monthly payment. Via this road, you find yourself taking care of a much easy-to-pay new debt and at the same time, ridding of the multiple loans that had created for you financial havoc all this time. And with the elimination of the old debts, you are in effect erasing the problem of dealing with the high interest rates that go with them.However, students must be careful about getting student debt consolidation. It should be emphasized that there are two types of college loans, the private and the government ones. If it so happens that you have both these types under your names, it is a must that you consolidate your loans into two groups – private and federal student loan consolidation.All kinds of government loans such as Perkins, Stafford and PLUS Loans should be consolidated under a government student debt consolidation loan. Why do we need to separate the federal from the private when consolidating? This is because the federal loans have lower rates of interest? If in case, they are consolidated together with the private ones, the advantage of having low rates will be disregarded. While your old government debts have different payment schedules and terms, once they are consolidated, there will only be a single repayment schedule leading to a much easier management of your debt. On the other hand, private debt consolidation loan should be employed when we want to merge private debts, and such loan can be availed as either secured or unsecured. Always remember, federal and private loans never mix as far as debt consolidation is concerned.
Are you concerned that bad credit will prevent you from going to college? While it is true that finding student loans with excellent interest rates is easier if you have a sterling credit rating, bad credit student loan aid is possible. For example, the most popular US Department of Education loan, the Stafford loan, assumes that most applicants will be going to college straight from high school, and will not have a credit rating yet. Therefore, Stafford loans do not even consider the credit rating a factor when it comes to qualifications. The same holds true for Perkins loans, which are federal loans designated for the neediest students. The only reason bad credit would interfere with these kinds of student loans are if you have defaulted on a federally granted student loan in the past.Bad credit student loans are also possible if your parents have better credit than you do. In this case, a PLUS loan, which is granted to parents and not to the student, might be the way to go. US Department of Education student loans (like Stafford and Perkins loans) assume that the parents will pay for a certain amount of their children’s schooling; PLUS loans are intended to cover the amount that the parent is obligated to contribute toward college costs.Federal funding is a good choice for a bad credit student loan because they are specifically designed to help make college more accessible; therefore, their requirements are much looser than those of most banks and other lending companies. However, if you are unable to secure a US Department of Education student loan, you may need to turn to private loans. If you are planning to graduate in a field with a high earnings potential, like law or medicine, you might have a better chance of receiving a bad credit student loan from private lenders.None of these choices are either/or possibilities, by the way. You may be able to put together enough money to finance college through a combination of any or all of the above types of loans. Moreover, even if your bad credit student loan is at a very high interest rate, all is not lost. Many student loans defer payment until you have finished college, giving you time to improve your credit rating. At that point, you might want to look into ways to consolidate your student loan at a better rate, lowering your payments to a more affordable level.
Consolidation Loan Repayment Options Vary By LendersYeah this one is totally right but most or generally, these repayment options are structured similarly. What varies or differs by student loan firms are the usually the interest rates that these loan firms are adding up as part of their private policies as an institutions. What should be well familiarized the college students or any loan applicant and member is the way your company does your repayment plans.For students who are school in school and are up to a loan consolidation program, they better keep up with the firms importantly. That is because these kinds of people are less informed and aware but are more prawn to some other student loan lending corporations predation. But you can’t be on this list once you know how loan repayments are regulated.The Commonly-Adopted Loan Repayment OptionThe well-known type of loan repayment option is the loan consolidation. This one is more used and preferred by most college loan consolidation applicants because they offer them good benefits. One of it is the ability of paying all your debts or repaying your loans with a single loan where the interest rate is carried through that single loan. plus the loan interest you got or have received is a fixed interest rate which means that it is a forever interest rate.Plus that there are some payment options made available to you. That is by extending the term of your payments so you can significantly reduce your monthly payments. Isn’t that a good reason for you to get one for yourself?Furthermore, once students consolidate their college loans, the repayment term is extended so that student’s monthly payment can be reduced. Usually, you can extend your repayment term from 15 to 30 years, but you do not have to extend your term. This gives you the flexibility to manage your loan term and interest costs because you are allowed to select a repayment term that truly works for you and so there is no need for students to extended term. And also you can prepay at any time with zero penalty to further decrease loan costs.This is how beneficial loan consolidation to college students once they decide to start repaying college loans. But sometimes, it nicer and advisable if students can start their repayment plans earlier. They get a loan consolidation while in school and with this action, it’s surely they will have less problem repaying their student loans when they graduate.