Consolidate Your Student Loans

Strategize Your Loan Repayment Process

Student loan consolidation programs give borrowers a very powerful tool for managing problematic repayment issues. Borrowers that default on federal loans cost taxpayers millions of dollars in repayment. Once upon a time this was a standard. Thanks to government intervention and a general revision in attitudes, a student consolidation loan is simply another variety of student loan. Arm yourself with the know-how to strategize your loan repayment process.

Consider Consolidation

When you consolidate loans, the original loan obligations are paid by your lender, either federal government or private lender. The lender creates one new loan with a lower interest rate and longer term of repayment that results in the classic “low, monthly payment.”

Typically borrowers are advised to consider a student consolidation loan thoroughly. Questions you might ask yourself prior to consolidating:

Federal Direct Consolidation Loans

The Federal Direct Student Loan program incorporates a Direct Consolidation Loan. Loans ineligible for the consolidation include private loans, federal Law and Medical Assist, Primary Care and Plato Loans. Features and benefits include:

Federal Consolidation Loans Through a Private Lender

Borrowers that hold one or more FFELP loans may choose to consolidate if loans are in grace period or repayment. Loans classified as default are ineligible. Nearly all lenders that administer the FFEL program bundle in a Federal Consolidation Loan option. Typical features and benefits include:

Private Consolidation Loans

Private consolidation loans allow borrowers to consolidate high dollar private loans. These are credit-based products that require a minimum amount of debt in order to borrow. Private consolidation loans may differ quite significantly from borrower to borrower. Features and benefits are unique to each lender and the business is quite competitive. Not every lender will offer a private consolidation loan. General features may include:

Strategic Points to Keep in Mind

If student loan consolidation seems too good to be true then you must take more time to consider. This type of repayment option is not for everyone. You will spend much more on your education than you would had you muddled through with your standard student loans. However, you must avoid delinquency and default at all costs.

Once your loans have entered default status you will be generally ineligible for an immediate consolidation. In this case you will be required to make arrangements with your lender who will, in turn, require you to make a set number of payments on the loan before you will be eligible to apply for consolidation.

Make certain any consolidation loan for which you apply is free of early repayment fees. Consolidation loans generally remain eligible for deferments if you should require one. Before you fly into a consolidation loan with any type of lender, consider your financial situation now and in the future and consult with an experienced loan manager.