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Student Loan Consolidation: Examine Other Avenues First

finMat2When you are looking at federal student loan consolidation as an answer to your financial problems, there are many things to consider. Understand the consolidation process and how it will affect your long-term finances. You will also want to see if you qualify for any other type federal loan benefits before you consolidate your loans.

In general, loan consolidation will lower your monthly payment demand by centralizing all of your federal loans into one in which you will have up to 30 years to repay. You will be able to switch any variable interest to a fixed rate. Increasing the length of time to repay your debt will mean more payments and more interest. Make sure you compare your current costs to consolidated costs before you make any changes.

Your federal debt may qualify for forgiveness programs and income-based repayment plans. Once your loans are consolidated, you will no longer qualify for those money saving benefits. Work with a consolidation service that will make sure your loans receive interest rate discounts, principle rebates or loan cancellation benefits prior to placing your debt through consolidation. The smaller debt totals will make for additional monthly savings and possibly long-term savings as well. The less you owe the shorter the payoff period.

Private loans are not serviced through federal programs. In order to receive student debt help for these, you will need to contact your lender of bank and find out their terms and conditions for consolidation.

Most federal loans are eligible for consolidation.

*Direct Subsidized/Unsubsidized

*Subsidized/Unsubsidized Federal Stafford

*Direct PLUS

*PLUS loans from the Federal Family Education Loan Program

*Supplemental Loans for Students

*Federal Perkins

*Federal Nursing

*Health Education Assistance

*some existing consolidation loans

If you are already in default on your debt, you will not be eligible to consolidate federal student loans until certain requirements are met.

PLUS loans which were given to a parent are not eligible to be transferred to their child through consolidation. Parents will remain the owner of this debt.

A direct consolidation loan will have a fixed interest rate for the life of the loan. It is calculated on the average interest rate for the loans entered into consolidation. This rate will never exceed 8.25%.

Call your student loan consolidation service, to set up a free consultation. Your student loan portfolio will be examined for potential eligibility into federal student loan benefit programs. It is important to understand the loans and their individual options. Depending on your degree and your employment, you may qualify for incredible savings. Income-based programs must be considered prior to consolidation. You should look at the full picture of savings. Don’t focus on just the monthly payment amount but also consider the long-term cost.

Once you enter the program, your college loan portfolio will be processed to bring you the ultimate in savings. Student loan relief services will only charge you a one-time fee with a money back guarantee to back their service. It is important to work with a trusted company so you know you will get the most savings for your dollar.

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