Sunday, July 22, 2007

Federal Loan Consolidation - Reliable Help At Hand

Student debt consolidation program is an easy way out for students and parents who are grappling with the multitudes of paperwork and due dates for each loan that has been taken for education. There are many types of loans, which the students can take for their education. Broadly speaking, they are Federal Loans and Private Loans. Let us discuss in details the basics of Federal Loan Consolidation.

An Overview OF Federal Loans

Federal loans are sanctioned by the U.S. education authorities and are usually approved easily. The different types of federal loans which are eligible for student debt consolidation are:

Federal Perkins Loans
Stafford Loans
PLUS Loans

Federal loans come with a guarantee or reliability of the US Government.

Federal Loans are tax deductible thereby giving you the advantage of increased cash in hand. These loans offer the facility of deferred payments incase you decide to become a student again. Federal Loans “might” be excused in extraordinary circumstances.

Can I Include And Consolidate All Loans In A Federal Loan Consolidation Program?

No, this is not possible. Federal Loans and Private loans cannot be merged when you opt for student loan consolidation. Federal loan consolidation, as the name suggests is a student debt consolidation program for Federal loans only. In addition, not every loan is eligible for federal loan consolidation. The borrower must be out of school or college. The federal loan repayment must have started or be in its grace period. The consolidated loan amount should ideally be above $10,000. Always remember to keep federal and private loans separate. Consolidate all federal loans into one program and all the private loans into another.

Why Should I Consolidate My Loans? I Have To Repay Them Anyway!

The main advantages of opting for a federal loan consolidation are,

Multiple loans are being merged into one. Keeps just a single loan recorded under your name

With student loan consolidation, you are free from keeping a track of all the due dates and the corresponding installments. There is less chance of missing an installment.

The consolidated monthly payment is considerably less than that what you would have paid otherwise. In some cases, you can save up to 45%! That means you have more money in hand every month to spend on other requirements.

You get to show an improved credit rating as you have just one loan and one creditor to take care of. This is an excellent opportunity to improve your credit ratings by being prompt every month.

Minimal or No credit checks. Yes, there are federal loan consolidation programs, which do not look at the credit ratings of the borrower. Keep an eye out for those programs if your credit score is nothing great.

You can stretch the repayment over a period of 30 years! The choice is the borrowers.

Whatever be your choice, student loan consolidation or individual payments, always remember that committing to a loan is a serious matter. Keep in mind the expenses you may have to incur in the next 10 years. It could be anything- Marriage, children, a new house or a new car… Keep a realistic picture in your mind and opt for a loan. Things always do not go as expected. Keep contingencies in mind.

Federal loan consolidation or student debt consolidation is an effective debt management plan designed specially keeping the problems of students in mind. With a student loan consolidation plan, you can breathe easy as now you have to manage just one monthly repayment as against multiple repayments. Student Loans Debt Consolidation offers more details about the process, benefits and types of student debt management methods.

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