Student Loans : News, Updates and Blog Posts

Almost all graduates with both federal student loans and private student loans would love to be able to consolidate all of their loans into one smaller monthly payment. Unfortunately, federal student loans and private student loans do not mix well and cannot be consolidated together. The rules of consolidation have changed drastically over the past few years and many lenders have removed themselves from the consolidation market all together. There are still ways to consolidate both federal and private loan; it just has to be done separately.

Federal student loan consolidation is done through the department of education. There is an application process involved, but generally everyone who wants to consolidate their federal student loans can. Federal consolidation extends the life of your student loans and can cut your monthly payments by up to 50%.  Consolidation is a great option for anyone having trouble meeting monthly payments.

Private student loan consolidation is a little bit trickier. Unlike federal loan consolidation, private loan consolidation is not automatically granted to everyone who applies. In fact, one of the only lenders doing private consolidations today is Wells Fargo. If you can get a private student loan consolidation it can significantly lower your monthly payments, but you will probably end up paying a lot more in interest over time.

Student loan consolidation can remove a lot of stress from your life. If you are feeling burdened by multiple student loan payments to multiple lenders every month it might be time for a change. By consolidating you student loans you can save hundreds of dollars a month and only have to worry about making payments to one lender. That is one lender, one automatic deduction or check, and one date to remember every month. After consolidating you will also be left with one interest rate which will be the weighted average of all of you previous interest rates.

So say goodbye to student loan payment stress and consolidate your federal student loans. You can even apply online for student loan consolidation quickly and efficiently.

During the holiday season most people are  reminded of how tight their monthly budget is and how quickly their paychecks disappears.  If your student loan payments have left you with no money remaining to buy groceries, let alone Christmas presents, then this holiday season you should consider giving yourself the gift of student loan consolidation.

If you have two or more federal student loans you can consolidate them and cut your monthly payments by as much as 50%. However, that is not the only benefit. Consolidating will also simplify your life. Instead of making payments to two, three or even four lenders every month you will only have to make payments to one lender.There is no fee for consolidating your loans and there are no early repayment fees if you decide you want to put more money towards your loans down the line.

Many graduates waiver back and forth when deciding whether or not to consolidate their federal student loans. If you are one of those people here are three good reasons to consolidate.

1: Your monthly payments will be lower: Consolidating your loans extends your repayment term. Therefore, your monthly payments will be a lot lower than they were before. You can cut your monthly costs by as much as 50%.

2: Your life will be simpler: Instead of having to make payments every month to a bunch of different lenders you will only have to make one payment to one lending institution.

3: It is free: There are no credit checks, fees or application charges and you will not be penalized for early repayment.

The average student who graduated from college in the spring of 2009 has $23,000 in student loan debt.  If you are in this boat and have come to the end of your loan grace period it is important that you start repaying right away or have a solid deferment plan in place to avoid going into default. If you are not sure if you can defer your loans, here are the situations that qualify for federal student loan deferment:

-You are in school: If you are in graduate school at least halftime you can defer your loans.

-You are unemployed: If you are unemployed you can defer your loans for up to three years.

-You are in an approved program: If you are studying in an approved graduate fellowship or rehabilitation program for the disabled you can defer your loans.

-You have an economic hardship: If you have an economic hardship that qualifies you can defer your loans for up to three years.

It is best to consolidate your student loans before deferring them. If you defer before consolidation your interest rates will continue to fluctuate, however if you consolidate first your rates will be locked in.

If you qualify for one of these deferment options you can find all of the forms you will need to notify your lender on our Student Loan Application and Form Center page.

While borrower benefits have dissolved for those seeking federal consolidation, .25 ACH not withstanding, private loan consolidation still offers borrower benefit options. Those benefits may impact where you ultimately choose to consolidate your private student loans.

Some of the most common private student loan consolidation benefits include;

• No origination fees
• ACH deduction
• rate reduction after a specified number of on time payments
• removing your co-signer after a specified number of on time payments
• economic hardship deferment

Make sure you compare the benefits each lender offers before finalizing your private loan consolidation.

Federal loan consolidation is something that many students have turned to these days to minimize their monthly payment, but what loans are considered under this program?  Below is a list of qualified federal loans.

• Subsidized Stafford Loans
• Unsubsidized Stafford Loans
• Federal Plus Loans – for parents and graduate or professional students
• Federal Consolidation Loans (excluding joint spousal consolidation loans)
• Federal Perkins Loans
• Certain Health Professions and Nursing Loans

Note:  To consolidate a Federal Perkins Loan or Health Professions/Nursing Loan into a Direct Loan Program, you must also consolidate at least one FFEL program Loan or Direct Loan.

For both FFEL and Direct Loans you can consolidate:

• During your grace period.
• Once you’ve entered repayment (the day after the end of the six-month grace period).
• During periods of deferment or forbearance.

Federal consolidation is designed to help ease the monthly burden of student loan payments.  By extending your loan terms you can minimize your monthly payment.  But there is more to it than that.  You need to be aware of the benefits you currently hold and what you may be sacrificing.  Perkins loans for example hold excellent borrower benefits that may be vanquished through the consolidation process.

The three most common loan types, which are consolidated, are Plus loans, Stafford loans, and Perkins loans. And while they are all federal loans they all hold different borrower benefits.  The Perkins loans, for example, hold a greater number of forgiveness opportunities than the other loan types do.

Perkins loans hold forgiveness opportunities for full-time nurses, VISTA or Peace Corps volunteers, full-time law enforcement or corrections officers and many more.  When you consolidate your federal loans you lose the individuality of your loan types, which makes trying to qualify for loan forgiveness post consolidation a daunting task.

You certainly do not want to lose a discharge benefit.  Talk to the holder of your loans and find out your benefits before consolidating.

First off, it’s not actually refinancing that you are doing as much as it is consolidating your student loans. Still, you will have a new interest rate and loan terms extended to you which is what refinancing is all about, so it is very similar.

The main difference between traditional refinancing and federal loan consolidation is how they arrive at your interest rate.  With traditional refinancing, like in the case of a mortgage, your FICO score, debt to income ratio, and earnings are all important factors.

When it comes to federal loan consolidation it is simply the weighted average of your loans rounded up to the nearest eighth that is fixed for the life of the loan.  The repayment term is dependent on your loan volume.