| A School Loan Consolidation Primer |
| By: Jay B Stockman |
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Hey Dad!, my son screamed from our front door, "I did it, I was accepted to Boston University.". My momentary exhilaration was overshadowed by the financial realities of college, especially private college. A quick calculation of my costs for 4 years of tuition, and expenses came to roughly $250,000, a very intimidating figure. Overwhelmed I thought, how could I possibly afford to send him to college? Fortunately, there are various options available to finance this academic endeavor.
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Federal programs are the single, largest source of school loan consolidation. The first step in applying for this type of aid is going on the Free Application for Federal Student Aid (FAFSA) website, at http://www.fafsa.ed.gov/, and fill out a comprehensive questionnaire. It generally takes around 7 days to process, at which point you will receive a Data Release Number, and Estimated Financial Contribution. It is important to find out if the school you will be attending participates in the federal student aid programs, most do.
There are several federal programs available for student aid, assuming school participation. The Federal Stafford Loans, are available to both undergraduate and graduate students. First-year undergraduates are eligible for loans up to $2,625. Amounts increase for subsequent years of study, with higher amounts for graduate students. The interest rate is variable, but never exceeds 8.25 percent. The Federal PLUS Loans are unsubsidized loans made to parents; the interest rate is variable,
but never exceeds 9 percent. Federal Work Study provides jobs to undergraduate and graduate students, allowing them to earn money to pay education expenses. These are the major federal sources of loan money for college.
Private education loans are also available from a variety of sources to provide supplemental funding when other financial aid does not cover costs. These loans are not sponsored by government agencies, and are offered by banks or other financial institutions. Sallie Mae is a unique loan that consists of a comprehensive package of both private and federal loans.
After accumulating 4 years of undergraduate education loans, it is best to consider a School Loan Consolidation Program.
Very simply, you can elect to combine all your outstanding loans into one student consolidated loan, which may create more favorable terms and simplify repayment, benefiting both the borrower, and the lending agency. Major benefits include the convenience of lower monthly payments, a single fixed rate, and one payment per month. There is a minor downside, however, students who do not consolidate their Stafford loans will have a 6-month grace period after graduation to begin making payments. Students who consolidate must begin making payments within 60 days of their consolidation. Both parents and students are eligible to consolidate student loans. The school loan consolidation program streamlines repayment by eliminating different terms, repayment schedules, and lenders.
Will I be able to afford my son’s college education? Careful financial planning, and research should make this endeavor a reality. While it is true that college tuitions continue to rise, there is more financial aid available to compensate for the increases. Ultimately, a good education is your best investment.
Jay B Stockman is a contributing editor for Online College Loan Refinance Resource Visit http://www.online-college-usa.com/ for more information.
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| 10 Pointers on College Loan Consolidation |
| By: Georgio Heberto |
Should I consolidate my college loans or not?
1. Still in school, yes! Rates are low, but they're scheduled to go up. Your college loan payments will then remain as manageable as possible when you leave school. If you have graduated, or will be graduating this May or June, yes! Graduates can lock in historical low rates, and reduce their monthly payments more than half. You can lock in a rate even while still in school, and even if you have been out of school for a couple of years can get a good deal, too.
2. The newest twist in the consolidation puzzle is the "in school consolidation", affecting students who are currently enrolled and will be enrolled past the July 1 consolidation. You can consolidate your existing college loans now to secure the low rates for at least part of their student loan portfolio.
3. Consolidating could save thousands of dollars in interest payments on college loans. There are impending student loan rate changes and new interpretation of regulations by the Department of Education, also, Congress is considering ending the fixed-rate program. Experts are urging students to consolidate to relieve themselves of a higher debt load.
4. Many students and families are looking for a simple, clear answer about whether to consolidate college loans or not. The simple answer is to take some of the bite out of the debt by loan consolidation. You could live like a miser and save as much money as possible or consolidate your federal student loans now.
5. For students still in school, you have an opportunity to choose consolidation. Consolidating would put a college loan borrower into repayment status, but the student can defer payments until after graduation by making a deferment request. Consolidating today can have payments put off until graduation.
6. The federal loan program allows consolidation, which is when a borrower pools his student debts together so that only one monthly payment is necessary, rather than several. It's not just the convenience of one payment that is making consolidation so compelling. The most significant aspect of the program is that it allows a person to permanently lock in a lower interest rate on loans. These loans are backed by, or granted directly by, the federal government.
7. Rates for federal Stafford loans, the most prevalent type of student loan, as well as some other types of federal student loans are set annually based on the rate of 91-day U.S. Treasury bills at the end of May. The exact rate won't be known until the end of the month, but experts say it will be about 2 percentage points higher. (Private loans and federal loans cannot be consolidated together.)
8. For the first time, the U.S. Department of Education will allow students still in school to consolidate federally backed loans. Federal PLUS loans can also be consolidated. PLUS loans are used to help pay the cost higher education.
9. Students, regardless of enrollment, should absolutely consolidate their college loans, arranged through the student's lender. There are no fees, no credit checks, and interest rates are expected to move higher. Those are good reasons to consolidate.
10. Act quickly to put lock on current federal-aid interest rates. Graduates should act now to insulate themselves from a drastic rate change. Apply early. Do not wait until the last minute to file paperwork. Those who have already graduated or left school should not wait to investigate consolidation. In the first six months after graduation, you are in a grace period. Within that six-month window, you can lock in a low rate on Stafford loans and spread the repayment over as long as 30 years.
If you're going to consolidate, now is the best time to do it.
About the Author
Georgio Heberto is dedicated to offering news, articles, and instruction on financing college education. You have a definite choice in how you finance your education and beyond. Visit http://www.atopeducation.com for more information. |
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| Keywords: student loan, loans, college, college loans, 'student loan', department of education, or not, still in school, loans or not, consolidate |
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