Federal Loan Consolidation – your Friend in Need
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Federal loan consolidation is all about providing loans to students in need of finance. These student debt consolidation loans come as a fresh lease of life to students who are already reeling under the impact of student loans taken earlier. These loans have a longer repayment date and are provided at a much lower rate of interest. You can take advantage of these loans in many ways. Students with bad credit or no credit can apply for federal loan consolidation. Your application does not go through a credit card check. You do not have to give any guarantee of income. Best of all, you do not have to pay any fees.
The Benefits Of Federal Loan Consolidation
The greatest advantage of federal loan consolidation is that it has the guarantee of the government. Private student loan consolidation companies try to entice borrowers by offering loans at a reduced rate of interest. Usually, the students get a package, in which they get a reduction in interest rates, a longer duration of payment and a lower monthly installment. During the term of the loan even if you miss an installment due to a financial crunch, you do not have to lose sleep over it as you can always apply for extension. You can also offer a date on which it will be possible for you to pay. Because of the ensuing benefits, federal loans are extremely helpful for student debt consolidation.
When you opt for federal loan consolidation, you should tread very carefully and choose your lender very carefully. You get only one chance to take a federal loan. Make sure that the lender is at a reachable distance and one with whom you can interact freely. Also, see that the lender gives you proper respect and consideration. A federal program helps you to save thousands of dollars in terms of interest. Besides, you have a longer tenure and lower fixed installment to pay. However, this program may be available for only a short term, so do not lose time and apply for a federal loan consolidation immediately.
Some More Benefits
Moreover, this is not all; students who pay on time get rewards and incentives from the government. You also improve your credit-rating if you a pay on time. With a federal loan consolidation program, you can save up to 60%on your monthly payment besides getting tenure as long as 30 years if the amount of loan is bigger than $10000. For all purposes, student loan consolidation companies are more than eager to provide loans under a federal loan consolidation program. This is a new loan for the student and he no longer needs to worry about the previous loan installments.
Federal loans are available for a big section of student loans and other loans. HPSL, NSL, FISL, ALAS, SLS, NDSL, HEAL, PLUS and LDS. The US government supports federal loans consolidation under certain conditions. You should try to repay your loan according to the terms and conditions; otherwise, the government pays the lending companies, and extracts the same from the borrower, which can be very inconvenient for the borrower.
Watch the video related to federal loan consolidation
When you consolidate your student loans with Private Fast Loans dot com, then like any other debt consolidation organization, the bank pays off all your existing loans and you end up making a single payment to Private Fast Loans dot com. One thing to keep in mind is that while most consolidating…
Help answer the question about federal loan consolidation
Can I put private education loans in my federal consolidation loan?I was just called by Sally Mae; the very rude collection agent was demanding that I make payment immediately for my loan that is 60 days overdue.
I am currently doing the paperwork for a William D. Ford Federal Direct Loan to consolidate all of my student loans together. The agent told me that would not take care of this loan because it is a private student loan not a federal. Is this true? What options do I have if any to get all of my loans consolidated together?
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Federal loan consolidation facilitates student debt consolidation by offering student loan consolidation programs to help the students trapped in the debt net. Student Loans Debt Consolidation provides information regarding student debt consolidation councelling and other debt relief options.
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Yes, it is likely to affect your credit rating if you are to consolidate your loans. It sounds like this is unfortunate for you as you really want to do the correct thing. I would ensure first that a consolidation loan really is the way to go as student loans are generally cheaper.
Your chances are prob pretty good to consolidate federal student loans. Don't consolidate federal student loans in any non-student loan consolidation loans, your interest rate will likely be higher and the interest you pay would no longer be tax deduct able.
Sallie Mae consolidates.
First, I need to clarify a few misconceptions in your question:
1) Interest rates on Federal Stafford Loans change EVERY July. They are set by the Federal government based on the 91-Day Treasury Bill. This July, they *will* be going up — but his is true for all lenders, not just Sallie Mae.
2) Rates don't "vary from 2.75% to 4.75%." The current rate on all Stafford Loans for all students currently in school (or for students in their grace or deferment periods) is 4.7%. In other words, the Stafford Loan that you got as a Freshman is at 4.7%, the loan you got this year is at 4.7%… and that kid sitting next to you in Bio? His Stafford Loan is at 4.7% too (even if he borrowed with Citibank).
NOTE: the student who graduated last year and consolidated last June probably has a different rate than you. This is because he consolidated before the 4.7% took effect on July 1, 2005. It's too late to get the rate he got, so take any advice he gives with a grain of salt.
OK, so, the reason that you are hearing about those OTHER rates (as low as 2.7%) is because there are *tons* of companies competing for your business, so they are all are offering additional benefits (rate reductions, principal balance reductions, etc.) to students who consolidate with them. For your own sake, be cautious. There are a lot of disreputable lenders out there. In fact, the lender that offered you that rock-bottom interest rate is probably the least reputable of all. The really great, reliable lenders don't have to sell their souls to get your business. The best way to find out if a lender is reputable is to ask your Financial Aid Office — they know which companies are good and which aren't (and they often have solid working relationships with the lenders' representatives).
For your reference, Sallie Mae is the #1 Consolidation lender (i.e they do the most business). Citibank is a distant #2. These companies are on top because they rarely (if ever) sell your loans, they offer good customer service, they are technologically advanced, and they've been in "the business" for ages. For a list of other consolidation leaders, try this link: http://www.finaid.org/loans/biglenders.phtml ("consolidation" is kind of toward the bottom of the page). Most of these are reputable. Any of the top 6 would be good.
There are a few other things you might want to consider:
First, you need to make absolutely sure that you're getting a "Federal Consolidation Loan." Some companies have their own, sketchy version of consolidation that has nothing to do with the federal gov't. Basically, they take your nice, safe Stafford Loans and turn them into private loans with questionable terms. If you don't get a Federal Consolidation Loan, then you won't be entitled to any of the protection or benefits of the Federal Student Loan program. To protect yourself, make sure the application you complete says "Federal Consolidation Loan" at the top like this one: http://www.salliemae.com/apply/borrowing/pdf/SMARTLOAN_consol_app.pdf
Second, I know that "borrower benefits" are attractive — and I fully support getting the best ones for my students. But make sure that you're weighing the monetary benefits with the qualitative benefits. When you consolidate, you're committing to a very long relationship with a single company. That company that offered you 2.7%… Ask yourself: have you ever heard of them? Do you know anyone who has used them successfully? Are you sure that you want the 3% rate loan with the no-name company? Or would you rather have the 3.5% rate loan with a lender you know and trust. It's up to you to decide, but before you do, make sure you know how much your overall payments would really change with that half-percent reduction. Try a "loan repayment calculator" like this one: http://www.finaid.org/calculators/loanpayments.phtml
Third, by all means, look into the companies with the really great-sounding benefits. Make sure you've read the "fine print": ask them how you earn the benefit, when it takes effect, and how you can potentially lose it. A lot of [good] lenders offer "principal reductions," but it's important to note that these reductions often don't take place right away and if you don't make ALL your payments on time, you may become ineligible. NOTE: this is a very good reason to set up auto-debit (so you never miss a payment).
Fourth, there are NEVER any fees to consolidate. If you're working with a company that has fees, RUN — it's a telltale sign that they are one of the "bad" companies.
Finally, yes, these consolidation offers are very similar to credit card offers… except this is a much bigger decision. Unlike with credit cards, you can't just "drop" your consolidation lender. It's becoming near-impossible to reconsolidate, so make sure that you pick someone you trust. (Consider going with the lender you have now, since your school probably helped you pick them, right?)
EDIT: sunshine_today is sort of correct in telling you to be wary of most of the offers that you receive in the mail. However, you will also receive legitimate mail from your lender that you should not ignore. With a *true* Federal Consolidation Loan, there are no "teaser rates" — there are benefits that you either do or do not qualify for. Nor are there any variable rate Federal Consolidation Loans — Federal Consolidation Loans are FIXED RATE loans. Period. (That's the whole point of consolidating!)
Go to http://loanconsolidation.ed.gov for information on consolidating federal student loans.
I was told by my banks that it has to be done through the Federal government now and was told to go here.
http://www.loanconsolidation.ed.gov/
Take a look at the site in the resource box below. It should help answer some of your questions.
By law, lenders are required to use the same interest rate formula for Consolidation Loans. However, many lenders offer interest-rate reductions for paying on time or via direct debit. It is important to read the fine print and understand how you become qualified for or disqualified for a lender’s borrower benefits programs. Beyond savings, you should consider customer service, flexible repayment options, online account access and applications, reputation and industry experience when selecting a lender.