An Overview of College Student Loan Consolidation Programs

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Due to economy uncertainties, many university and college graduates are facing difficulties to pay back their student loans when their grace period is over. To rescue this situation, the college student loan consolidation programs are offered to this group of people. These programs involve combining multiple student loans into just ONE LOAN at ONE FIXED interest rate, with ONE REPAYMENT monthly. It is indeed ideal for a person to consolidate his or her student loans when the interest rate is low during economy downturn.

Why do we need these consolidation programs?

Consolidating multiple student loans is necessary for the following purposes:

• Reduce the monthly student loan repayments
• Improve the graduates' financial positions in the long run
• Reduce the graduates' financial burden as they are paying a lower interest rate
• Improve the graduates' credit rating
• Make the debt repayment process simpler
• Save more money in the long run
• Avoid the unemployed graduates from suffering financial difficulties

At the moment, federal and private student loan consolidation programs are the most popular programs in the market. Under federal consolidation program, a person is allowed to combine all his federal student loans into just one debt at a lower interest rate. No employment, collateral or cosigner requirements needed to obtain the approval. On the other hand, private loan consolidation programs are suitable for those who have non federal loans. These programs are normally offered to people who intend to lump their multiple private study loans together. The approval process is normally stricter as it is based on the credit score of the applicants.

You have to be very clear that different college student debt consolidation programs are offered to suit different individuals' needs. Each program has its different eligibility requirements for the applicants. It is indeed important for you to do your own research thoroughly in order to decide whether it is really worthwhile for you to consolidate your student loans.

Article Source: http://www.approvedarticles.com

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4 Reasons to Consolidate Your Student Loans

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By Heather Jarvis

Consolidation is like refinancing—you get a new loan, the new loan pays off your old loans, and you pay the new consolidation loan instead. Why bother? Below are some important FAQs on this subject:

Which loans can I consolidate? You can consolidate pretty much all kinds of federal student loans like Subsidized and Unsubsidized Stafford Loans, PLUS Loans, and Perkins Loans, including most federal loans in default. But be careful—defaulted Direct Consolidation Loans can't be reconsolidated, so you only get one chance to use consolidation to get out of default.

[Pick from the federal student loan smorgasbord.]

When does consolidation make sense? Consolidation might make sense if:

1. You want to combine your federal loans and make just one monthly payment.

2. You want to lock in a fixed interest rate on variable interest rate loans (those borrowed before 2006).

3. You need a way out of default.

4. You have Federal Family Education Loans, or FFEL (federal loans from a bank or private lender like Sallie Mae) and you want those federal student loans to be eligible for Public Service Loan Forgiveness (since only Direct Loans are eligible).

[Learn more about the Public Service Loan Forgiveness program.]

What are the downsides to consolidation? It's important to understand the potential disadvantages to consolidation. For instance, you'll have the option of taking longer to repay, so a consolidation loan could cost you more over time (since interest keeps adding up until you're done). If you consolidate while you are in school—currently allowed under limited circumstances—you'll lose your grace period. In addition, if you're close to paying off your loans, consolidation might not be worth the effort.

How can consolidation get me out of default? If you're in default on your student loans, you can't get new loans to go back to school, and you face severe collection procedures. Consolidation can give you a fresh start. You can consolidate defaulted student loans into a Direct Consolidation Loan and stop collections including garnishments and tax intercepts. Be aware that if you are in default, your balance will go up after you consolidate, because collection fees will be added to the loan.

Can I consolidate my private student loans into a Direct Consolidation Loan? I wish. Unfortunately, private loans are not eligible for consolidation into a Direct Consolidation Loan. And, for Pete's sake, beware of consolidating federal loans into a private consolidation loan. Federal loans have important borrower protections that you lose if you choose to consolidate federal loans with a private lender. Also, federal consolidation loans generally have lower interest rates. Only Direct Loans offer federal consolidation loans these days.

[Read the 6 advantages to federal student loans.]

How do I apply for a Direct Consolidation Loan? You can apply online for a Direct Consolidation Loan. Direct consolidation loan applications submitted online are processed more quickly than those submitted by mail. Be sure you include the right information about the loans you are consolidating. You'll need to know the balances of all your loans to complete the application. If you make mistakes on the application, it will probably delay processing.

Where can I get more details? For more information about consolidating, check out these resources:

--Student Loan Borrower Assistance provides comprehensive information for student loan borrowers.

--FinAid has lots of great advice about all kinds of financial aid, including consolidation loans.

--The Direct Consolidation Loans site has consolidation application forms and FAQs.

Searching for a college? Get our complete rankings of Best Colleges.


Article From : http://www.usnews.com/education/blogs/student-loan-ranger/2011/01/19/4-reasons-to-consolidate-your-student-loans

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Student Loan Default: It Might be the Borrower, not the School

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From: howwillipayforcollege.com

The latest data on student loan default rates was published yesterday by the Department of Education, and you can expect the typical hand-wringing headlines over predatory loan practices as well as the practices of for-profit institutions. But, as usual, the story is more nuanced when you look behind the headlines.

First, an historical perspective. In the 1987-1991 timeframe, the average total default rate was 19.3%, with a high of 22.4% 1990. In addition, the historical low was 4.2% in 2003. So the current rate of 8.8% is not out of the normal range. The full data from the above study (see chart below) shows that although there is a recent uptick (likely due to the recession), the current rate is far from it's peak of 20 years ago, and within "normal" range. The definition of default period from this study is, "The two-year period that begins on October 1 of the fiscal year when the borrower enters repayment and ends on September 30 of the following fiscal year", and timing of the recent recession falls right in that time frame. Since default can certainly occur after this two-year period, this measurement is likely an understatement of the true default rate.

From the National Postsecondary Student Aid Study, the average amount owed for graduating seniors and the average tuition and fees for full-time four-year degree students (non-doctorate granting schools) can be compared to the default rates from the previous report, as below.

Cumulative Student Loan Debt (2008-09)
Tuition & Fees Paid (2007/8)
2009 Default rates
Total
$ 24,145.00
$12,432.10
8.8%
Public
$ 20,124.10
$ 5,002.90
5.2%
Private nonprofit
$ 26,933.20
$ 19,953.70
4.5%
For-profit
(2-year or more)
$ 36,757.50
$ 11,211.50
15.0%

The chart shows that for-profit colleges have the largest cumulative student loan debt, with the corresponding highest default rate. However, the students graduating from private, non-profit schools show a higher cumulative debt than public school students, with a lower default rate. Since higher-income families are more likely to have students in private, non-profit schools, they would have better means to deal with this debt. Also, graduates of private, non-profit schools have higher average salaries.

An industry study argues that risk factors for default are student financial independence, full-time employment (working more than 35 hours/week), part-time enrollment, and single parent status, based on Department of Education data. This coincides with a literature review of default studies that shows it is usually an attribute of the student, not the school, that determines default. Successful students are the best predictor of student loan repayment; those with low GPAs and dis-engaged with their studies correlate best with default rate. This is something within the substantial control of both the student and the school, if the school is invested in the student's success - too often they just want the tuition bill paid. It is also possible that there is a correlation between the attributes of successful students (hard work and responsibility) and successful borrowers.
Consider that the recent recession is having an impact on the ability of recent college graduates to find jobs at all, let alone in their field. A recent Rutgers University study concluded that 30% of recent graduates took their first job after graduation just to pay the bills, in a position that was either not related at all or not closely related to their field. The average starting salary for those with a first job in their field was $35,000, and $25,000 for those with a first job not directly in their field. With a average debt load of $24,145 on a typical 10-year student loan, this translates to a payment of about $278, or about 9.5% for a graduate in or near their field and 13.3% for those not in or near their field. At an income level of $25,000 and 13.3% going to a student loan, that leaves little room for living expenses, and a lot of room for doubt of the immediate worth of their education.

All this means that students must be realistic about the usefulness of their education relative to the job market, as well as the value offered by the education and a careful evaluation of how much they can realistically borrow. And perhaps even more so when considering for-profit schools.

Article Source : http://www.zimbio.com/Student+Loans/articles/ByuEkO1xjOi/Student+Loan+Default+Might+Borrower+not+School Link

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Student Loan Consolidation Info - How Much of a Loan Do You Actually Need for College? - 1257th Edition

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From: yynr.net

Just because you qualify for a certain amount of funds doesn’t mean that you have to take all of them. When financing your college education, only borrow the amount it actually takes to pay for your classes and books.

You should figure how much you could save by taking a lower amount than what you had originally planned to finance your education. By lowering the total amount borrowed you will also be lowering the amount you will have to pay back each month.

Think of ways to lower the amount you will have to borrow for school so that you can stay on top of your student debt once you have your degree. So many people fall in to the trap of borrowing way too much and then not being able to pay it back. Only borrow as much as you can afford to repay each month to avoid going into student loan default. Many financial futures are destroyed by taking on a loan that is more than you needed to fund your college education.

Find a way to cover your other expenses without including them in the amount you will need for funding your higher education dreams. This can be done by working longer hours when your not in school and saving the money to use during the academic year for any of the expenses that are not included in your student loan.

Find out how much the schooling will actually cost you and then look into scholarships that you may qualify for to help pay for your education. Many people rush through this process without looking into all of their options and miss out on the thousands of dollars that could be saved by applying for scholarships.

Scholarships should be looked into before making a decision about how much of a student loan is actually needed to finance your college education.

Also try lowering your living expenses so that the amounts you will need to borrow on a student loan also becomes less. Lowering your living expenses can be as easy as making a cup of coffee at home before stopping off at the coffee shop where they cost $4 each. Just $4 per day adds up to $120 each month, and if you can lower your expenses by just this much it could be the difference of thousands of dollars over the life of your loan.

Just imagine how much interest would be tacked onto this amount month after month while you are paying back the loan. Find other ways to lower your everyday living expenses to get the costs down to a minimum while you are in school. After all, you should be concentrating on your academics and not thinking about the amount you will have to pay back in the future.

Ian Wilkie is an author of many Student Loan Consolidation Info articles related too Federal Government Student Loan Repayment & Federal Student Loan Info and owner of - My Student Loan Consolidation Information your one-stop online resource for Student Consolidation Loan Information.

Article Source: Student Loan Consolidation Info - How Much of a Loan Do You Actually Need for College?

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Consolidate College Loans : Its Pros And Cons

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Just like with any financial solution, when you consolidate college loans, you get both its benefits and disadvantages. Right after graduation, it is advisable to take serious steps and to consider how you can best repay your student loans. By consolidating your student loans, you combine multiple loans into one.

How Student Loan Consolidation Works

It's actually very easy and simple. When you borrow a number of student loans from different lenders when you're in school, you might have a hard time keeping up with all the payments. By consolidating loans, all your student loans are combined into one new loan from one lender, at a lower interest rate, and even longer time to repay. Although this might sound enticing, it is best if you consider the benefits as well as the drawbacks so you can make a good decision.

Consolidation During Grace Period

You have an advantage and a disadvantage here. The good thing about this is that you can receiver a lower consolidation loan interest rate if you consolidate variable-rate Stafford loans during your grace period (six months after you leave school before you start making payments). However, the bad side is that when you start consolidating your loans during grace period, you forfeit the remaining grace period and have to begin making payments on your consolidation loan within 60 days. To solve this, you can consolidate your loans during the later part of your grace period.

Repayment Period Extension

Based on your total education loan debt, repayment period can be extended up to 30 years. This means that your monthly payments will dramatically decrease. If you're having a hard time coming up with the monthly payments, then this will be good for you. However, by stretching your debt over a longer time, you will be paying more interest over the life of your loan. In the end, you'll be paying more for your loan in the long run. That's why it is better if you settle your accounts with the shortest repayment period possible that you can afford. And, there's no penalty for prepayment so you can pay even before the payment is due.

One Payment From One Lender

The good thing about loans consolidation is that it will really simplify your life. You only have to deal with payments to one lender, and is thus less hassling to you. On the downside, you could be giving up some benefits that your current loans provide such as loan cancellation and deferment eligibility.

Those are just some of the things you have to consider before you consolidate college loans. It's up to you to decide if the pros outweigh the cons, or the other way around.

Discover why it's wise to http://www.loanconsolidationguide.info/college-loan-consolidation.html consolidate college loans. Get more info on http://www.loanconsolidationguide.info/) school loans consolidation online.

Article Source: http://www.statssheet.com/articles/article75367.html

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Student Loan Consolidation Options Comparison

Posted by Gagan Singh | Labels:

For many people who choose to pursue higher education, the student loan becomes one of the largest financial burdens which they will ever bear. It is important, therefore, for your financial stability that you take care in making decisions about how you will arrange and repay your student loans. If you have decided that you want to pursue the option of consolidating your loans, then it is critical that you compare student loan consolidation offers in order to ensure that you get a consolidation loan under terms that meet your needs.

It may not be immediately obvious why it is so critical to compare student loan consolidation options. Student loan offers are often superficially similar, since in most cases the interest rates will be set based on a rate that is dictated to the government. However, private companies still compete for customers with student loans and may offer different repayment terms, discounts, and levels of flexibility if a situation ever arises where you are having trouble making your payments. There are many legal protections for companies which issue student loans, which makes it exceptionally difficult to escape paying them through means such as bankruptcy. This makes it critical that you not accept loan terms that you cannot manage. If you want more information on how to compare your loan consolidation options, click here.

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