Free Videos On Federal Direct Student Loan

Student Loan Consolidation - How does it Function?

Student loans are an excellent source of financial aid for students who need assist paying for their education. Regrettably, students usually leave college with burdensome debt. Additionally, they typically have numerous loans from distinct lenders, meaning they're writing a lot more than 1 loan repayment check every single month. The solution to this issue is loan consolidation.
What is loan consolidation?

Loan consolidation indicates bundling all your student loans into a single loan with one lender and one repayment program. You are able to think of loan consolidation as akin to refinancing a house mortgage. Whenever you consolidate your student loans, the balances of your existing student loans are paid off, with the total balance rolling over into 1 consolidated loan. The end result is that you have only 1 student loan to pay on.

Both students and their parents can consolidate loans.
Should I consolidate my loans?

Loan consolidation provides several advantages:

Locks in a fixed, usually lower, interest rate for the term of your loan, potentially saving you thousands of dollars (depending on the interest rates of your original loans)
Lowers your monthly payment
Combines your student loan payments into 1 monthly bill


Additionally, consolidated loans have flexible repayment possibilities and no fees, charges, or prepayment penalties. You'll find also no credit checks or co-signers required.

You should consider consolidating your loans if the consolidation loan would have a lower interest rate than your current loans, especially if you're having trouble producing you monthly payments. Nevertheless, if you're close to paying off your existing loans, consolidation may not be worth it.
How will the interest rate for the consolidated loan be?

The interest rate for your consolidated loan is calculated by averaging the interest rate of all of the loans being consolidated and then rounding up to the next one-eighth of 1 percent. The maximum interest rate is 8.25 percent.

To figure your interest rate, visit loanconsolidation.ed.gov for an online calculator that will do the math for you.
Just how much can I save?

Just how much you save by consolidating loans depends on what interest rate you get and no matter whether you decide on to extend your repayment program. According to Sallie Mae, the leading provider of student loans in the United States, consolidating student loans can decrease monthly payments by up to 54 percent. Even so, the only strategy to reduce your payment this considerably is to extend your repayment strategy. You typically have 10 years to repay student loans, but, depending on the quantity you're consolidating, you'll be able to extend your repayment strategy all of the way up to 30 years. Keep in mind that in case you decide on to extend your repayment term, it's going to take longer to pay off your overall debt and you'll pay more in interest. There are no preypayment penalties, so you'll be able to often select to pay off the loan early.
Am I eligible to consolidate my loans?

In order to consolidate your loans, you need to meet the following criteria:

You're in your six-month grace period following graduation or you have began repaying your loans
You've eligible loans totaling over $7,500
You might have more than one lender
You have not already consolidated your student loans, or considering that consolidation you've gone back to school and acquired new student loans


The following types of loans could be consolidated:

Direct Subsidized and Unsubsidized Loans
Federal Subsidized and Unsubsidized Federal Stafford Loans
Direct PLUS Loans and Federal PLUS Loans
Direct Consolidation Loans and Federal Consolidation Loans
Guaranteed Student Loans
Federal Insured Student Loans
Federal Supplemental Loans for Students
Auxiliary Loans to Assist Students
Federal Perkins Loans
National Direct Student Loans
National Defense Student Loans
Health Education Assistance Loans
Well being Professions Student Loans
Loans for Disadvantaged Students
Nursing Student Loans


Where can I get a consolidation loan?

It is possible to consolidate your loans through any bank or credit union that participates in the Federal Family Education Loan Program, or directly from the U.S. Department of Education. The loan terms and conditions are generally the same, regardless of where you consolidate. You could wish to check 1st with the lenders that hold your current loans.

If all your loans are with one lender, you must consolidate with that lender.

In case you determine to consolidate your student loans, don't forget that you can only do so when unless you go back to school and take out much more loans. As a result, you are going to want to make sure you get the best deal the first time. The interest rate will be the same from all lenders, but some lenders may possibly offer future rate discounts for prompt payment as well as a discount for having monthly payments directly debited from your account.
Can my spouse and I consolidate our loans together?

You'll be able to consolidate your loans together, however it just isn't an excellent notion for a couple reasons:

Both of you will often be responsible to repay the loan, even should you later separate or divorce
In the event you need to defer payment on the loan, both of you may have to meet the deferment criteria


When ought to I consolidate my loans?

You can consolidate your loans any time in the course of your six-month grace period or following you have started repaying your loans. Should you consolidate in the course of your grace period, you may be able to get a lower interest rate. Nonetheless, because you will lose the rest of the grace period, it really is an excellent notion to wait until the fifth month of the grace period just before consolidating. The consolidation method generally takes 30-45 days.

This post is distributed by NextStudent. At NextStudent, we think that obtaining an education will be the greatest investment you are able to make, and we're dedicated to helping you pursue your education dreams by producing college funding as simple as probable. We invite you to understand more about Student Loan Consolidation at NexStudent.com.