Taking Advantage Of A Federal Student Loan Consolidation Program

Taking Advantage Of a​ Federal Student Loan Consolidation Program
Earning a​ college degree is​ one of​ the​ most important - and expensive - things you​ will do in​ your life .​
If you​ are able to​ attend college without having to​ take out any student loans,​ you​ are one of​ the​ lucky few .​
Most individuals have to​ borrow at​ least some of​ the​ money they need for tuition,​ books,​ and living expenses .​
And upon graduation,​ you​ are faced with the​ challenge of​ repaying all of​ those loans after the​ grace period ends,​ whether you​ are employed or​ not .​
That can be a​ hard dose of​ reality when you​ realize that not paying your loan payments on​ time,​ or​ not paying them at​ all can have grave consequences where your credit rating is​ concerned .​
That is​ why it​ is​ smart to​ consider a​ federal student loan consolidation program.
Loan consolidation entails taking out a​ single loan in​ order to​ pay off several others .​
This is​ done for convenience,​ as​ you​ can often get a​ lower interest rate,​ and you​ only have 1 monthly loan payment to​ keep track of .​
It is​ also good for your credit history .​
Often,​ student loans are guaranteed by the​ United States government .​
With a​ federal student loan consolidation program,​ currently held loans are purchased and closed either by a​ loan consolidation company or​ by the​ U.S .​
government .​
Who handles the​ loans depends upon what type of​ federal loans the​ borrower has.
The interest rates for Federal student loan consolidation programs are very reasonable .​
They are lower than your average bank loan .​
They are calculated based on​ the​ current year's student loan interest rate,​ and in​ turn calculated based on​ the​ 91-day Treasury bill (a government bond used as​ a​ debt-financing vehicle of​ the​ U.S .​
Federal government) rate at​ the​ previous auction (held every year in​ may) of​ the​ year .​
The interest of​ student loans are variable,​ but can not go over the​ maximum of​ 8.25% for Stafford Loans and 9% for PLUS loans (Federal parent loans).
Student loan consolidation programs are available to​ former students who have more than a​ minimum amount of​ federal student loan debt (usually more than about $10,​000) .​
Parents with more than a​ minimum amount in​ PLUS loan debt are also eligible to​ consolidate .​
If an​ individual chooses to​ consolidate his or​ her federal student loans,​ the​ loans can be consolidated through a​ private lender,​ and the​ borrower can only consolidate again through the​ U.S .​
Department of​ Education .​
Upon consolidation,​ the​ loan is​ charged a​ fixed interest rate that does not change even if​ the​ loan is​ reconsolidated .​
And,​ with a​ federal student loan consolidation program,​ there are no fees applied or​ closing costs to​ be paid .​
This differs from private lender debt consolidation.
Taking advantage of​ a​ federal student loan consolidation program can be beneficial to​ your credit history,​ by helping it​ stay clean .​
It is​ easier to​ keep track of​ and remit 1 monthly loan payment than to​ keep track of​ 2 or​ more student loan debts,​ especially if​ you​ move frequently .​
And losing track of​ a​ federal loan is​ never a​ good idea .​
Loan consolidation is​ especially good if​ you​ are having trouble making all of​ your scheduled loan payments on​ time .​
Defaulting on​ your student loans is​ a​ very unfortunate situation to​ be in,​ and can lead to​ having property and possessions taken from you​ in​ order to​ pay the​ debt .​
You can also consider requesting loan forbearance from your lender,​ which allows you​ to​ take a​ break from your payments,​ or​ make interest-only payments .​
However,​ the​ longer you​ wait to​ pay your debt,​ the​ longer it​ will be hanging over your head .​
With consolidation,​ repayment is​ extended over a​ longer period of​ time which,​ in​ addition to​ the​ single lower interest rate you​ will have on​ your loan,​ they payment are lower and more manageable within your budget.
If you​ are interested in​ a​ student loan consolidation program,​ you​ can consult the​ U.S .​
Department of​ Education,​ or​ one of​ the​ lenders with whom you​ currently have a​ student loan for information .​
During the​ application process,​ you​ can learn exactly which of​ your loans qualify for consolidation (hopefully they all do!),​ and be on​ your way to​ more manageable student loan payments.

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