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Last post 03-15-2017, 17:41 by fedloan. 0 replies.
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  •  03-15-2017, 17:41 2237

    Fedloan | Myfedloan

    Student loan consolidation explained

    Consolidating student loans is the process of linking all or some of your student loans into a new loan. By consolidating student loans, the borrower would only have one loan, with a monthly payment, the interest rate and term. People generally consolidate or refinance student loans to reduce or simplify their payments.


    The Complete Guide to Student Loan Consolidation and Student Loan Refinancing

    4 Easy Steps For Student Loan Consolidation (And Everything You Need To Know)

    Student loan consolidation is the process of combining all or some of your student loans into a new loan. Through consolidation, the borrower would only have one loan, with a monthly payment, the interest rate and term. People generally consolidate or refinance student loans to reduce or simplify their payments.

    The consolidation process begins with four steps:

    Understanding the Difference Between Federal Student Consolidation vs. Private Loan Refinancing Loan - Both of these programs can reduce your payments, but in very different ways. Federal consolidation offers payment flexibility and long-term forgiveness options, while private consolidation can lower your interest rate (such as lowering your monthly payment as a result). Understanding the benefits and risks of each program will help you decide which is the best fit
    Understanding Your Monthly Payment and Total Payment - Both consolidation options allow you to go from multiple loans to a single new loan with one payment, one interest, one term and one lender. With federal consolidation, you have the option of multiple payment options that can base your payments directly on your income and family size. Your interest rate will be a weighted average of your previous federal loans. You will also be able to see the amount of your total payment at any time with this new loan and enjoy the forgiveness of any remaining balance once your term ends. With private consolidation, a private lender can directly reduce your interest rate, making your monthly payments both lower and result. They can also increase the length of your repayment term that can make lower monthly payments (but possibly a larger total payment at the end of the term). The private lender and program with which you will ultimately decide how your payments are affected and full refund the monthly amounts.
    Determine Your Eligibility - Your student loans whether federal or private will determine the consolidation programs are available to you. Federal consolidation and forgiveness requires that there be direct federal loans, while both federal and private loans are eligible for private consolidation / refinancing (much more on this below).
    Take Action - Once you understand the differences and benefits of consolidation programs and their eligibility for either, the fourth step is to take action and begin the application process.
    This article will take you through these four steps in a very simple and simple way so you have all the answers you need to finally take action! Read on below to learn more.


    Wistia video thumbnail - Student Loan Consolidation


    Understanding Student Loan Consolidation Federal Private Student Loan Refinancing

    Both types of consolidations can reduce your payments and reduce the headache of having to keep track of multiple student loans (which may decrease the risk of accidental default), but the similarities usually leave there ...

    Generally speaking, federal student loan consolidation can help create forgiveness and payment flexibility (as long as the borrower enrolls in the right program) while private student loan consolidation is usually done to get a lower rate of interest , Thus lowering your payments (and the total amount paid) as a result. Usually this depends on the rate the borrower has when they first took out their loans and the interest rates offered to refinance student loans.

    For those with both private and federal student loans, it is often very beneficial to do a private student loan consolidation for your private loans and a federal student loan consolidation for your federal loans. Yes, you can do both!


    Now let's take a look at the benefits and eligibility requirements for each program.

    Consolidation of federal student loans:

    Federal consolidation is an excellent choice for those looking to reduce their monthly payments and apply long-term forgiveness options . It is especially helpful for low income borrowers as payments are based on discretionary income, which in some cases can lead to monthly payments of $ 0 !

    Federal consolidation is available to borrowers who have direct federal loans and are no longer in school. Consolidation is done through the William D. Ford Federal Direct Loan Program (known as) Click here to see more.  )

    Here is a basic description of how federal student loan consolidation works:

    A borrower with several federal student loans applies for the consolidation of
    If the borrower is eligible, his loans are combined into a new consolidated loan with a single payment, interest rate, term and lender
    The borrower is able to enroll in a payment program based on his income that includes long-term (options) forgiveness. Note: Federal consolidation establishes your payment based on your income, it does not lower your interest rate)
    General, federal loan consolidation is relatively easy to qualify and apply for (and offer many more benefits than private consolidations). They also offer many benefits to the borrowers of liquidity and difficulties with their student loan payments today.

    Here is a list of the many benefits offered by federal student loan consolidation:

    NO credit check required
    It is available to borrowers currently in default on their loans
    It retains the flexibility of federal student loans direct (with deferment / patience and income-based payment options)
    It extends the term of the loan, allowing lower payments (and payment options with no penalty to avoid more accrued interest)
    It allows borrowers to enroll in programs that sets the amount of payment based on the borrower's income (Learn more here ). This can keep your payments manageable even if you have low income and provide flexibility should your income be reduced at any time.
    You can remove some of your current borrowers default state (those with wage garnishments are not eligible and must undergo rehabilitation student loan first)
    For some borrowers, allow your eligibility for Public Service loan forgiveness (after 120 payments)
    Offers late-term forgiveness for any unpaid loan balance (after 20-25 years depending on the program)
    It allows the borrower to choose their loan () Navient technical , FedLoan services , The Great Lakes , Nelnet )
    You can apply directly online for federal student loan consolidation here or Learn more on our Federal Consolidation Page before you begin.

    Federal Student Loan FAQ - Consolidation:

    What types of federal student loans are eligible?

    Only federal direct student loans can be consolidated under this program.

    When can my loans be consolidated?

    They are typically able to consolidate after graduation, drop out of school or fall below part-time enrollment.

    Will my interest rate change?

    Federal consolidation does not lower your interest rate, it simply takes a weighted average of the loans you already have. Because federal consolidation does not change your pace, if you are a highly solvent borrower, you may want to consider private consolidation or refinancing .

    Will federal consolidation change my payment options?

    Federal student loan consolidation often allows you to extend your repayment term based on the balance of the consolidated loan. Borrowers are usually able to extend their duration from 10 to 30 years. This can reduce your monthly payment, but it can also increase the total amount you pay in the long run.

    When will the payment of my consolidated loan begin?

    Repayment of a consolidated loan begins immediately, with most borrowers receiving their first bill within 60 days of the approval and disbursement of their newly consolidated loan.
    Can I still take advantage of my grace period?

    Yes. If any of your current student loans are still within your grace period, you can delay the repayment of your newly consolidated loan until your end of grace period. You can do this by asking the loan servicer for the consolidated loan to delay the processing of your application until towards the end of your current grace period.

    What if I have already consolidated my federal student loans?

    In this case, you can not consolidate again unless you have added another federal student loan total loan since then.

    Can I consolidate my student loans if I am currently in default?

    Yes, as long as you do not have a wage garnishment against you. Consolidating your defaulted student loans and enrolling in a repayment plan based on your income can be a great way to get a "fresh start" and make your student loan situation much more manageable. Those who have a salary first must undergo rehabilitation before being eligible to consolidate.

    By consolidating, can I take advantage of income-based and forgiveness plans if I am eligible?

    Absolutely! This is usually one of the best reasons to consolidate your federal student loans. Keep in mind however, you are not automatically enrolled in your income plans. You should select this option consolidation (or later) take advantage of them. In addition, not all federal loans are eligible to enroll in all income-based plans. For example, Parent Plus loans are only eligible for contingent rent payments (not IBR , PAYE , or REPAYE programs).

    Is there an application fee to apply?

    There is no application fee for federal student loan consolidation.

    Can I Apply for Federal Consolidation Online?

    Yes, you can apply directly online here .

    How can I learn more before applying?

    You can learn more about the federal consolidation process and your options through the Department of Education as well as our Federal Student Loan Consolidation Page . You can also call  1-844-669-4407 to speak with a company focused on helping borrowers.

    Private Consolidation Loan (or Refinancing):

    Consolidation / private refinancing is a great option for someone looking to lower their interest rate and thereby their payments (and the total amount paid) in the future. Unlike federal consolidation, private consolidation can make both federal and private student loans.

    A private consolidation is a great option for borrowers who already have a high interest in their student loans. By consolidating or refinancing at a lower rate, the borrower can enjoy substantial savings over the term of the loan. These lower rates may be available to borrowers for a variety of reasons:

    Interest rates have declined since the borrower pulled out his loans
    The borrower has become more solvent since he graduated (has higher income, better credit score, etcetera).
    Here are the basic refinancing loan needs:

    Good credit: Score should generally be greater than 660
    Good debt-to-income ratio: Banks generally want it to be less than 40-45%
    Proof of stable income: usually more than $ 25k / yr
    Because the debtor is effectively taking out a new loan from a private institution (lending the old loan), private refinancing is usually much more difficult to obtain. As such, there are usually those who are eligible to receive the greatest benefit from privately funded solvent borrowers .

    For solvent borrowers, private loan consolidation is available through many private lending institutions . Currently, many lenders who offer student loan refinancing are quoting adjustable rates as 1.95% and set rates as low as 3.75%.

    Note: When evaluating your options, keep in mind that once you consolidate your federal student loans into a private loan, you can not take advantage of the Federal Direct Program. For borrowers with solid financial stability, this may be fine, but with less financial stability should consider other options .

    For more information on consolidating private student loans, click here .

    FAQ - Private Consolidation Loan:

    Am I eligible for private student loan consolidation?

    Because private institutions do all this, there is no automatic eligibility. Generally, you will be evaluated based on your creditworthiness . If you are behind on your loans, chances are you will be eligible.

    When can I consolidate my loans on a private loan?

    They are typically able to consolidate after graduation, drop out of school or fall below part-time enrollment.

    Will this lower my interest rate?

    This depends on the current rate and its credit value. If you have a high rate and a good credit score, you can have a good shot at eligibility. LendKey and CommonBond are just a few of the sites that can help you.

    How much private student loan consolidation / refinancing cost?

    It varies depending on the private lender you decide to work with.

    If I am struggling with my private loans, are there forgiveness programs or other ways to reduce my payment?

    There are currently no private loan forgiveness programs, but some law firms specialize in private student loan relief. Student debt relief can help you identify those companies that specialize in this area. Click here for more information on these options or call us for more information at 1-844-669-4407 .


    A word of caution: When consolidating your student loans, be SAFE Do you know what type of consolidation you are making. There are numerous bad reputation / scam companies out there that are consolidating borrowers with federal student loans into private student loans without the borrower understanding the implications of this - they can result in you not being able to take advantage of forgiveness or repayment programs Based on your income!
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