Student Loan Debt Consolidation

By Sam Ferdi

consolidate student loans

Who should consolidate their student loans?

If you have several student loans to pay concurrently, it can be hard and financially difficult to manage. You then apply for a student loan consolidation to cut on your payments each month and to save on money for an accumulated period of time.

Repayment of the student loan debt consolidation differs from the regular repayment methods. The repayment will be due only when the student graduates from studies.

To find out which loans can be included in a student loan debt consolidation:

1. Contact the Direct Loan Origination Center’s Consolidation Department if you’re applying for a direct student loan debt consolidation.
2. Contact a participating Federal Family Education Loan (FFEL) lender if you’re applying for a FFEL student loan debt consolidation loan.

You will need the following information when applying for consolidation of your federal student loans:

1. The balances and interest rates of your current eligible federal student loans.
2. The names and addresses of the companies that hold or service your federal student loan. These are the companies that handle billing, collections, deferments, etc. of your current federal student loans.
3. The names and addresses of two personal references in the United States of America.

Five student loan consolidation advantages:

1. Lower payments every month.
2. Have simple and convenient loan payments.
3. Have fixed interest rates. With certain federal student consolidation loans, one may have a permanent fixed rate on a student loan.
4. Payment period can be extended. You can then give attention on earning money rather than making several monthly student loan payments.
5. Student loan consolidation can help ease the burden of several monthly bills.

Students qualify for the cheapest interest rates. The interest rates and other terms of the student loan debt consolidation must be given prime importance.

Four different types of student loan debt consolidation plans:

1. Standard Repayment Plan. This plan offers a maximum of 10 years to repay your student loan debt consolidation at a fixed rate. Payments are calculated by dividing the loan amount within that time period at a fixed interest rate.
2. Extended Repayment Plan. It is the same as standard repayment plan except it stretches the repayment period to a maximum of 30 years.
3. Graduated Repayment Plan. This plan has a maximum repayment period of 30 years which is the same as extended repayment plan. However, the amount of your monthly payments will increase every two years.
4. Income Repayment Plan. The monthly payment of this plan is not fixed. Rather it is determined by several factors such as your total student loan amount, the size of your family and your income level. The maximum repayment period is 25 years.

Like any other debt, student loans could influence your future decisions and your credit history. Additionally, when a student loan debt has exceeded eight percent of your income, it is seen as bad credit when assessed for further loans.