Government Student Loan Consolidation Simplified

Government Student Loan Consolidation Simplified
Once a​ grantee needs to​ start paying his student loans,​ it​ is​ advisable that he seek loan consolidation .​
Student loans usually have varying interest charges,​ but with consolidation,​ the​ grantee is​ commonly locked into a​ lower interest rate and installment amounts,​ and therefore a​ loan easier to​ pay.
The Process Of Consolidation
Loan consolidation is​ simply taking out the​ existing loans from lenders and pooling them into a​ single loan .​
Taking out means the​ consolidator pays each lender a​ balloon payment for the​ outstanding loan balance,​ thus assuming the​ loan risks .​
The consolidator then restructures the​ loan,​ resulting in​ lower repayment amounts,​ but usually a​ longer payment term .​
However,​ a​ consolidator may maintain or​ even lessen the​ rates,​ depending on​ the​ creditworthiness of​ the​ loan grantee .​
The terms vary on​ a​ case-to-case basis.
Types Of Government Student Consolidation Loans
Generally,​ two types of​ government student loan consolidation schemes .​
The first is​ direct consolidation loans .​
This is​ making payments directly to​ the​ US government Department of​ Education,​ bypassing any bank or​ secondary lending institution that may have lent you​ the​ monies firsthand.
The second scheme is​ the​ FFEL (Federal Family Education Loans) consolidation loan program .​
This government student loan consolidation scheme uses a​ new lender between the​ original lender and the​ federal government .​
Included in​ this scheme are standard student loans such as​ Stafford loans,​ PLUS loans and Perkins loans.
However,​ some states also offer government student loan consolidation programs funded from the​ state treasuries .​
They are also competitive programs in​ terms of​ repayment and interest,​ often tailor-fitting the​ plans to​ unique state or​ university requirements.
States without state-funded programs such as​ Alaska,​ Arizona,​ Hawaii,​ Indiana,​ Kansas,​ Maryland,​ Mississippi,​ Nevada and Wyoming use USA (United Student Aid) Funds as​ the​ national guarantor of​ their government student loan consolidation programs.
Benefits of​ Direct Consolidation Program
In this program,​ government-subsidized loan interests continue to​ be subsidized,​ and exhausted deferments might be renewed .​
These benefits are not readily available in​ any other private or​ government student loan consolidation programs .​
Private programs usually tack on​ additional interest charges for taking out loans for consolidation.
Benefits of​ State Student Loan Consolidation
Being more place-specific,​ state loan consolidation programs are generally more forgiving and flexible .​
Many states offer benefits for on-time or​ advanced payments,​ reduce interest rates on​ diminishing balances or​ direct withdrawal repayment methods,​ or​ include deferment options for qualified students in​ their menu.
In many instances,​ your state can offer the​ best government student loan consolidation options .​
Be sure not to​ skip exploring them.
In conclusion,​ whichever way one may look at​ it,​ availing of​ a​ government student loan consolidation program,​ whether state or​ direct,​ will benefit the​ loan grantee trying to​ pay off his student loans in​ many ways beyond simply reduced worries and hassle.

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