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:: HOME :: CREDIT CARDS :: LONG DISTANCE :: INTERNET SERVICE :: LOANS · Main Page · Auto Loans · Home Equity Loans · New Mortgage Loans · Refinance Loans · Student Loans  Loan Consolidation Private Loans Tips and Advice Calculators· Debt Consolidation · Credit Report & Score · Tips & Advice - New! · Calculators - New! · Loan Glossary · Loan FAQ · Info & Resources :: CELL PHONES :: INSURANCE :: ONLINE BANKING :: KNOWLEDGE :: MORE |
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Student Loans Tips and Advice Center Topic: Choosing a Consolidation Program See the subtopics menu for tips and advice about choosing a student loan consolidation program. For additional information about student loans, see the topic list directly below.
 Understanding Student Loan ConsolidationWhat is student loan consolidation? Student loans are great resources for assisting with tuition payments, accommodations, books, and living fees associated with higher education. Once that diploma is in your hand, however, graduates are often faced with a long list of student loans to repay, all with varying interest rates and payment terms. For many students, the option at this point is to start comparing student loan consolidation options. Before doing this, however, it's best to fully understand what student loan consolidation actually is and what it means to you financially. The Higher Education Act (HEA) is a loan consolidation program under both the Federal Family Education Loan (FFEL) and Direct Loans. With these programs, the graduate's college loans are combined into one new loan. People often choose to consolidate student loans because of lower interest rates along with the possibility of a longer repayment period. The result is usually a more manageable repayment schedule, which makes borrowers less likely to default. It's important to note that only the following student loans are eligible for consolidation:
It can get confusing, but just remember that only the Direct Loan program may consolidate Direct Loans. Likewise, not all FFEL consolidation lenders will include non-FFEL loans. If you're confused and need more help, check with your university or college registrar or bursar. They should be able to get you pointed in the right direction. ^ Back to top Student Loan Consolidation Repayment OptionsWhat are my repayment options if I choose to consolidate my student loans? Student loans are a great way to finance your education. Inevitably, however, paying those loans back comes into play. The main difference between federal and private consolidation loans is that a federal consolidation loan comes with a fixed interest rate that follows a set federal formula, while private consolidation loans come with a market rate that may be fixed or variable. Repayment options vary between federal student loans and private student loans. The benefits of choosing a private student loan consolidation lender include the following
While these options may provide immediate benefits, it's always wise to consider the long-term financial gain. At the end of 30 years, how much interest above your original student loan will you have paid? The benefits of choosing a federal student loan consolidation lender may include:
If you want to consolidate college loans, weigh the benefits of repaying in small, monthly payments over several years, versus regular monthly payments at a fixed interest rate, over the shorter term. Ask yourself one question. Do you want to finance your lifestyle or your education? ^ Back to top Good Loan Consolidation vs. Bad Loan ConsolidationHow do I know the consolidation lender is reputable? Once you've determined that you qualify to consolidate student loans, make sure that the lender is reputable. Think before you act and remember to trust your gut instinct. Before signing on the dotted line, be sure to ask yourself these questions:
^ Back to top Comparing Interest Rates for College Loan ConsolidationHow much interest can I expect to pay on my student loans? You've graduated! Now it's time to sit down and take a long hard look at those student loans that have accumulated. The typical six-month grace period between graduation and making that first payment on your student loans can creep up quickly and you may be panicked to realize that your combined student loan payments are more than you can handle. What to do? It might be time to consolidate college loans into one easy-to-handle monthly payment. When searching for the best student loan consolidation companies, do a little investigative work on student loan consolidation rates. Do you have private or federal student loans to consolidate? Federal student loans are subsidized by the government, which could mean lower interest rate options for you. On private college loan consolidation, the interest rate is determined by taking a weighted average of the interest rates on all loans to be consolidated and rounding up to the nearest 1/8 of a percent. Federal consolidation loans, however, come with a fixed interest rate that follows a set federal formula. The fixed interest rate for consolidation loans varies from borrower to borrower and are based on the borrower's underlying loans' primary rates. ^ Back to top The Best Customer Service For Your College LoansHow can I find the best student loan consolidation company? Like any other company competing for your business, the best student loan consolidation company wants to lure you in with a variety of perks and benefits. Naturally, you want the best offer for your money, but what about customer service? Here are a few things to consider when seeking out student loan consolidation lenders:
Of course, these are just a few things to be on the lookout for when searching for the best student loan consolidation company. Just remember, while you're looking for the best service, don't be swayed by overtly outrageous offers. Ultra-low payments over time may sound like a good idea now, but how much money will you really be spending when all is said and done? Ask lots of questions and don't be afraid to get advice from a campus registrar, bank, or financial advisor. ^ Back to top The Perks of College Loan Consolidation RatesWhat benefits will I get from choosing one student loan consolidation company over another? While you're in the process of researching student loan consolidation rates, remember that you can only refinance federal education loans with a federal consolidation loan program. All interest rates for federal consolidation loans are locked in at fixed rates and, in most cases, can be locked in for the entire repayment term. Recently, a leading provider of federal consolidation loans published a chart showing the fluctuations of interest over the past 11 years. Interest rates have ranged anywhere from over 8% to for post-grads, down to just over 2%, and then back up to approximately 8.8%. A leading federal student loan consolidation provider reports a current interest rate of approximately 6.45% (2007). In addition to locking in those college loan rates, consider any perks or benefits being offered to you. A leading federal consolidation loan provider offers incentives such as a .25% interest rate reduction when payments are made through automatic debit transactions, an extra 1% rate reduction after 36 consecutive, on-time payments and a 0.6% discounted rate for recent graduates who apply during their grace period. All in all, the best student loan consolidation companies should be able to offer you some perks or benefits for doing business with them. You've made great decisions about your education, now it's time to make great decisions about your money. ^ Back to top
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