How to Consolidate Private Student Loans at a Fixed Rate

Posted on December 25, 2011 by admin

How to Consolidate Private Student Loans at a Fixed Rate

Money problems are no longer a hindrance for someone to enter college. There are many financial aid plans students can take advantage of to fund their college finances such as federal and private loans. However, the borrower should practice effective money handling as not to fall into a debt trap.

Having multiple debts is indeed stressful especially if you’re a student. Instead of focusing on how you’ll stand out in class, you now transfer your attention to your money issues. Fortunately, there are ways on how to solve this predicament.

Honestly, after college, you’ll be starting a new life and believe me it will be very hectic for you. Imagine yourself after graduation, can you still manage to handle a number of loans up your sleeves?

You may choose to merge your loans if you are maintaining various debts with a number of lenders. People opt to merge their private student loans for a number of reasons. Merging your student loans basically means that you’ll find a legitimate creditor to coalesce all of your student debt into one manageable loan. With that you don’t have to maintain a number of loans and payment, you’ll just have to be responsible in making one payment to one lender.

Benefits of Consolidating Private Student Loans

Consolidating your private student debts allow you to enjoy a number of great benefits.

First, you are guaranteed of a lower payment. By consolidating your mortgage you will get the stress off your shoulders by getting your periodic payments lower than your original payments.

Second, you are required to only make one payment to one creditor. Instead of worrying because of your various student loans and payments, you will only be responsible to one simple periodic payment.

Third, you can enjoy a low fixed interest rate. When you merge your private student loans you will have a lower and fixed interest rate, which will lower your long term and general payments to your creditor.

Finally, by merging your private student loans you’ll improve your credit standing, in view of the fact that by combining your mortgage the better your credit record will appear to creditors.

Can I Combine my Private Student Loans At A Fixed Rate?

The answer is a definite YES. Fortunately, there is a way you can consolidate your private student debts. Besides, you can also combine all your student loans too.

Given that information, what you need to do is consolidate first any federal student mortgage you may have. After which, you may merge all your private student loans. You’ll certainly save a lot through this. Consequently, you’ll lower your interest rates, have only one or two lower periodic payments, and you’ll greatly improve your credit standing.

If you are merging your private student loans, you will be merging those student financial aid loans that are non-federal excluding Perkins and Stafford. Luckily, you can also take in other amount outstanding in this private student debt consolidation, like credit card debts. Just make sure that it was used in education purposes.

Nevertheless, make certain that you do not merge all of your mortgages like the private and federal. If you do, you’ll definitely lose out on some savings with the interest rates you’ll acquire. You can still merge these mortgages but do them individually. By doing so, in time, you’ll save a lot money.

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Student Loan Debt Resolution Settlements

Posted on December 25, 2011 by admin

Settlements are the option considered by students who find it very difficult to repay the loans taken by them for their education. Settlements involve an intermediate agency that negotiates with the lender to provide the student borrower an ease in repayment.

Settlement agencies charge some fees upfront when one enrolls for their settlement program. Once a student is enrolled, the settlement agency collects some money every month from the student and accumulates it into a temporary escrow account. This money is accumulated until it is deemed suitable enough by the settlement agency to negotiate with the lender. The negotiations result in the student having to pay a reduced amount, even on the principal, and thus settle the loan. A settlement may, on the face of it, save the student even up to 50% of the loan amount.

Settlement agencies are more an advantage to the lenders than to the borrowers. They collect money from the borrower, and thus the lender is assured that they will be paid their due amount. If the student were to file for bankruptcy, then the lender would not have got anything of the due. Thus, settlement agencies work hand-in-glove with lending companies, though on the face it may seem that they exist for the borrowers’ benefit.

The option of settlement must be considered by the student only in the most extreme of cases. In actuality, a settlement makes the student pay more than bargained for. Since there are no payments to the lender for several years, the loan becomes a default, incurring late charges and even interest upon interest. When the settlement company finally wishes to settle the loan, the loan has to be revived and this attracts more charges. These charges are usually hidden from the borrower. Also, settlement companies charge monthly maintenance fees from the student. Thus, a student must very carefully consider the wisdom of settlement before approaching the agency. It must also be considered if filing for bankruptcy is a better option.

The facility of settlement loans is provided for economically unstable students who cannot afford to pay the huge monthly interests. However, there are several others who avail of this facility, attracted by the lucre of getting something for nothing.

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What is the Best Student Loan Repayment Plan?

Posted on December 24, 2011 by admin

Some Tips To Help You Choose Best Student Loan Repayment Plan

It is natural to feel invincible after completing your education and graduating from college. However, do not let your confidence turn into overconfidence. You will be starting your productive life with a big debt on your shoulders, so you will have to repay your loan as quickly as possible. Choose consolidation of debt for the numerous advantages that it offers.

What’s the Advantage of Debt Consolidation?

The most obvious advantage of debt consolidation is that you will end up with a single loan to repay every month. This is much better than having several debts to follow up. If your time and effort is spent in searching for employment, consolidation will help. By searching well for the right plan, you can get a plan that offers a great deal at a low interest rate.

What About Federal Consolidation Programs?

Federal loan consolidation programs offer low interest rates that are not variable. Variable interest rate plans may seem attractive due to the low initial rate. However, once the variation starts, the debt may rise very quickly.

Many consolidation programs offer the graduated payment facility to those who opt for consolidation of student loan repayment programs. You can start with low monthly payments and proceed to pay more as you earn more.

About the the Graduated Payment Option

If you still have not found a job or if your initial salary does not help you save much, the graduated payment option can help you overcome the situation without defaulting on the loan. Such an option will actually help you save money very quickly to make your student loan repayment much easier.

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Student Loan Interest and Debt Management Facts

Posted on December 24, 2011 by admin

Student loan interest can now be used as a tax deduction on personal income tax returns, thanks to changes made the United States government and the IRS. New student loan interest rates went into affect on August 1, 2005, changing the previous one. This can greatly help students and parents at tax time.

Despite a federal government initiative to encourage higher education over the past few years, with the offer of deferred loans that include much lower rates than regular or private types of loans, and put off pay back until a student has completed their studies, the impact on new and existing loans is the same. Interest builds over time and interest is made on the balance, which will eventually include some of the interest, itself. The result is that despite less worry about finance during the educational period; the final balance is much higher than before, affecting students’ financial situations and income tax returns.

Initially the government offered a two-pronged opportunity to student loan candidates. The first is subsidized; whereby the government covers the interest until a student’s education is completed because the student’s need for financial aid is higher. The second is unsubsidized whereby the student is fully responsible for dealing with any interest on top of the loan. Private and other student loan creditors also provide a deferred type of personal loan, but the interest rates are higher, the loan is unsubsidized, not necessarily following the government’s strict guidelines, and the student is fully responsible again for paying interest upon interest plus the original loan balance. The private and other sectors have made a high profit industry out of student loans and unfortunately many students do not fully comprehend how interest upon interest works.

In a sense, even though some most private creditors do follow government’s rules, debt management and credit counseling services do in fact aid their own profits instead of truly helping students by encouraging them to take out further loans to consolidate their student loan debts which costs students even more money. It is imperative for parents and students to be fully cognizant of their student loans’ conditions and terms, government or private, but most importantly students need to be managing their money by paying of interest as and when it is applied each month. In other words, loan payments may be okay to defer, but do not defer paying the interest.

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New Repayment Break on Student Loans Begins July 1

Posted on December 23, 2011 by admin

It’s not an easy time to be graduating from college with student loans. With the unemployment rate soaring toward 10 percent and the average starting salary for college graduates down 2.2 percent this year, student loan borrowers – whose average debt from student loans tops $22,000 – are now having an even tougher time affording their student loan payments.

The good news? Starting July 1, 2009, graduates with federal college loans may be able to qualify for a new government program that can reduce the monthly payments on their student loans based on their income.

Income-Based Repayment for Federal Student Loans

The income-based repayment program, created by Congress in 2007 as part of the College Cost Reduction and Access Act, will cap a borrower’s monthly student loan payments at a percentage of her or his income, when the borrower’s income is at least 50 percent higher than the current federal poverty line for the borrower’s family size.

These income-based student loan payments will be calculated as 15 percent of the amount by which a borrower’s adjusted gross income exceeds 150 percent of the poverty line.

(For individuals, the 2009 poverty line is $10,830 in all states except Alaska and Hawaii. The complete federal poverty guidelines for 2009 are available on the website of the U.S. Department of Health and Human Services.)

For example: 150 percent of the current individual poverty line of $10,830 is $16,245. If a borrower’s annual adjusted gross income is $25,000, the monthly payments on her or his eligible student loans would be capped at $109.44 – 15 percent of the difference between $25,000 and $16,245, divided by 12 months. If a borrower’s annual adjusted gross income is $40,000, the monthly payments on any eligible student loans would be capped at $296.94 ($40,000 – $16,245, multiplied by 15 percent, divided by 12).

Income-based monthly payments will be adjusted annually, based on a borrower’s federal tax return from the previous year. As a borrower’s income rises, the income-based repayment cap will also go up. If the income-based repayment cap reaches a level higher than what a borrower’s monthly payment would be under a standard 10-year student loan repayment plan, the borrower will no longer qualify for income-based repayment for her or his student loans.

Borrowers whose adjusted gross income falls below 150 percent of the poverty threshold won’t be required to make any payments on those student loans that qualify for income-based repayment.

Even if no payments are due, however, interest will continue to accrue on those college loans . Unpaid interest will also accrue if a borrower’s income-based monthly payments aren’t sufficient to cover the full monthly interest on the qualifying college loans. Any accrued unpaid interest will be added to the student loan principal and capitalized when the borrower no longer qualifies for income-based repayment.

Subsidized Interest and Student Loan Forgiveness

For those borrowers who hold subsidized student loans or a federal consolidation loan that included subsidized Stafford loans or Perkins loans, the government will cover any unpaid interest on those subsidized loans (or on that portion of a student loan consolidation that’s comprised of subsidized loans) for the first three years that a borrower is in income-based repayment.

The longest that a borrower can remain on the income-based repayment plan is 25 years. After 25 years of income-based payments, the government will forgive any remaining principal and unpaid interest – although borrowers should note that under current tax law, this forgiven student loan debt would be taxable.

Borrowers who are employed full-time in qualifying jobs in the public service sector may have their remaining student loan debt forgiven after just 10 years in the income-based repayment program, and this forgiveness would be tax-free, thanks to a ruling from the U.S. Treasury last year.

Qualifying for Income-Based Repayment

To find out if you qualify for income-based repayment on your federal college loans, you’ll need to contact your lender and provide information about your financial situation – you’ll need to demonstrate “partial financial hardship,” as defined by federal regulations.

Only federal Stafford and Grad PLUS student loans in good standing, along with consolidations of these college loans, are eligible for income-based repayment. Federal Perkins loans are eligible only if they’ve been included in a federal student loan consolidation. Other college loans are ineligible:

Private student loans. The income-based repayment program applies only to federal student loans. If you’re having problems meeting the monthly payments on your private student loans , you should contact the lenders to see if they’re willing to work out more affordable repayment plans for you. Keep in mind, though, that private student loans typically have less flexible repayment options than federal student loans.

Federal PLUS loans. If your parents took out PLUS parent loans to help you pay for college, they won’t be able to take advantage of income-based repayment on their PLUS loans. Consolidation loans that included PLUS parent loans are also excluded from income-based repayment. Any Grad PLUS loans you took out as a graduate student, however, as well as consolidations of Grad PLUS loans, are eligible.

Defaulted student loans. Your student loans don’t have to be new to be eligible – even long-time graduates may be able to qualify for income-based repayment on college loans taken out years ago. But you can’t be in default on your loans. To qualify for an income-based repayment plan, any federal college loans you have in default will need to be rehabilitated first.

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Student Loan Debt Negotiation

Posted on December 23, 2011 by admin

During a negotiation, two or more parties discuss certain mutually satisfactory conditions to resolve a certain issue. Students can also negotiate with their lenders about loans that they find difficulty in repaying. Loan negotiations cannot result in complete elimination of the loan, but the student may get a reduction in the rate of interest or longer tenure of repayment or some other such concession.

Debt negotiations are best done by a third, mutually neutral party. There are negotiating agencies that study the case of the student who has taken the loan and then discuss with the lenders, trying to get as much benefit as possible for the student. Negotiators work on behalf of both the lender and the borrower and a successful negotiation is one in which both the parties are satisfied with the agreed conditions.

Usually, when a student decides to enter into negotiations, there are already stalled payments. But the very act of entering into a negotiation indicates that the student is willing to repay some of the debt. However, a student must resort to negotiation only as a last measure. Lending agencies have no wish to enter into negotiations, as there is no logical reason for them to settle for anything less than what is due to them.

Debt negotiators do not come cheap. The biggest qualification of a debt negotiator is that they carry some clout and are experienced in matters of loan financing. Most debt negotiators charge their fees upfront, or at least 60% in advance. This is a huge setback for student borrowers who are already deep in debt and in fact, defeats the entire purpose of negotiation. Negotiators are not very transparent in their dealings and let the student debtors know only what they need to know. These are dangerous issues and there may be unsettled dues towards the negotiators even after the debt has been long settled.

Students can perform their negotiations themselves, thus eliminating the need of negotiators. A negotiating agency won’t do much more than what the students can do themselves. If there was a guarantor involved during the processing of the loan (which is now obligatory under Federal Family Education Loan Programs), then debt negotiations become simpler. Students can negotiate on any loan amount, but the decision of acceding to the negotiations lies in the hands of the lenders.

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Student Loan Debt Consolidation – The Government Can Help You

Posted on December 22, 2011 by admin

Student Loan Debt Consolidation – The Government Can Help You Reduce Your Debt

As more students now pursue their studies and carriers, school and college fees have also increased. As a result, most students have very large student loans by the time they complete their studies.

Government student loan consolidation offers an option which may reduce the burden of several loans with high monthly payments.

How Does A Government Student Loan Consolidation Help You Reduce Debt?

A government student loan consolidation enables students to consolidate outstanding education loans into a single new loan that lower your monthly payments since the terms of payment will be extended. This gives the students more financial flexibility.

The monthly amortization for the government student loan consolidation will also be lower since the repayment can be spread at a longer period, which makes it convenient to students and parents. The interest rate will also be reduced since the borrower will have a lot of benefits plan options. It is advisable to consolidate your loan right after graduation before the grace period ends. This will allow the borrower to lock in the lowest interest rate possible on the loans.

Besides, attaining licenses in certain fields is impossible when you failed to pay off your student loan debts. With all these consequences, it is then clear that avoiding a student loan is no way to start a life after college. If you do come back and take out more and more student loans, you will be able to consolidate again after graduation.

When Is The Right Time to Consolidate Your Student Loans?

In the government consolidation loan program, it is interesting to know that there are actually no deadlines connected to it. It is supported by the fact that you can apply for the student loan anytime during the grace period or even on the repayment period. But to consolidate student loans, some considerations must be paid attention.

To consolidate student loans, you should know that it usually take place during your grace period. At this moment, the lower in-school interest rate will then be applied to estimate the weighted average fixed rate to consolidate student loans. And once the grace period has ended on your government student loans, the higher in-repayment interest rate will be applied to estimate the weighted average fixed rate. Given such process, it is then understandable that your fixed interest rate for government student loan consolidation will be higher if you consolidate student loans after your grace period.

And when you are interested to consolidate student loans, you should know that even if your student loans are already in repayment, to consolidate student loans is still allowed and beneficial. It is for the reason that when you consolidate student loans at this time, you already fix the interest rate on your government student loans while the rates are still originally low.

Student loan consolidation can help most borrowers in many ways. However, it is still necessary to note that rates won’t actually stay low without end. It is best to do your research now while rates are still low.

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Federal Loan Consolidation Gives Students A Breather

Posted on December 22, 2011 by admin

Federal loan consolidation provides financial relief for students graduating with debt. Students who consolidate their loans get lower monthly installments, fixed interest rates and additional benefits. All this is done without a credit check, income verification or fee. Student debt consolidation companies do not have a downside and it’s beneficial in many ways for students who have taken multiple educational loans from different borrowers. In this consolidation program, the consolidated loan is almost like a new loan where all existing loans are paid of by the student loan consolidation companies and the students has just one new loan at better terms and write just one check toward the monthly payments.

Benefits Of Federal Loan Consolidation

There are several benefits of these federal loan consolidation programs as listed below: The first benefit is getting a loan at lower monthly installments, fixed rates and larger repayment period. The repayment period can be extended from standard 10 years to up to 30 years, depending upon the total amount of federal loan consolidation. Some borrowers allow graduate repayment schedules for student debt consolidation, where the borrowers can keep more of their initial salary for themselves and the monthly installments increase as their salary increases in coming years. There are no credits checks or co-signers required for taking these loans. Some student loans consolidation companies also offer special rewards and incentives to people who maintain good loan pay-back record. If the student has loan amount exceeding $7,500, he or she can apply for the federal loan consolidation. These loans are supported by the US government on certain basis. If the borrower is unable to pay, the govt. pays to the lender and recovers the money from the defaulter.

What Loans Are Eligible For Consolidation?

There are certain loans which are eligible for federal loan consolidation. They are: Federal Stafford Loans, Federal Perkins Loans, Federal Direct Loans, Health Professions Student Loans (HPSL), Nursing Students Loans(NSL), Federally Insured Students’ Loan(FISL), Auxiliary Loans to Assist Students(ALAS), Federal Supplemental Loans for Students(SLS), National Direct Students Loans (NDLS), Health Education Assistance Loans(HEAL), Federal Parents Loan for Undergraduate Students(PLUS) and Loans for Disadvantaged Students(LDS).

The federal loan consolidation is a great way to help out students in their education and enable them to repay their loans on time. If you are facing problems in taking care of your monthly repayment checks or are confused with too many loans, then opt for the federal loan consolidation and enjoy the benefits.

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Consolidating Your Government College Loans – Pros and Cons

Posted on December 21, 2011 by admin

Consolidating your government college loans can be both an advantage and a disadvantage. Are you thinking of combining your loan debts for a better repayment process?

The fact that you’re trying to look for the best way to pay off your debt is a good thing. However you have to make sure that your decision is the right one for your current situation because this also has a huge impact to your future.

What are the benefits of consolidating your government college loans?

1. Your federal interest rate is lowered

2. You can extend your repayment term

3. You can choose from different repayment plans including Standard, Extended and Graduated plans

4. You get to pay only one loan every month

5. You don’t have to pay a fee when consolidating federal loans

6. No credit checks and pre-payment fees

7. It is much simpler to apply for federal consolidation than private bank consolidation

What are the disadvantages of consolidating your government college loans?

1. Consolidation will void special borrowers’ benefits if you have a Perkins Loan.

2. Consolidating your debts will void the six month grace period. You will be required to repay immediately.

3. If you have accumulated a large amount of loan debts, you may end up paying thousands of dollars more than the original amount of your loans. This is because of the extended repayment period. The longer you repay your debts, the more you pay in terms of interest.

4. If you have paid most of your loan already, there is no sense in consolidating your debts. You are better off paying your debts the same way you’re doing it.

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Student Loan Reconsolidation Help

Posted on December 21, 2011 by admin

Loans availed by students for the purpose of financing their education generally ends up becoming totally unmanageable both in terms of liability and their repayment. This is when the concept of reconsolidation aptly solves the problem. Under reconsolidation all the loans are aggregated into a single loan with a single monthly payment of liability. This not only reduces the monthly liability but also provides flexibility in repayment, thereby enabling improvement in credit score.

Different Types of Reconsolidations:

There are basically two kinds of reconsolidation namely Federal and Private. Federal Consolidation is an easy process and maintaining a decent credit score makes it all the more simple. Private Loan Consolidation is complex involving thorough verification of the credit score. The interest rates are high when compared to Federal Loan Consolidation.

Rules on Reconsolidation:

The following rules are to be observed before proceeding for consolidation of your loans.

oThe outstanding student loan balance should be minimum $7,500.

oNo fee charged for Student Loan Consolidation

oWhere the student’s loan is taken from a single private lender, he should be offered the right to consolidate first. On his refusal you can look out for other lenders.

oWhere the loans are taken from different private lenders, you can directly proceed to consolidate it with a different lender altogether.

oConsolidation can be done either at the time of graduation or six after completion or after having started to repay the loans.

oInterest rates on Federal Consolidation can be as low as 5% to 7%

oRates are lower when you are still a student.

oRates on Stafford and PLUS loans change every 1st of July. Law specifies maximum rate of interest on these loans.

oYou are entitled to a loan forgiveness program provided you perform certain specified services.

oFederal loans can be consolidated only once. While private loans being regular loans are consolidated at the discretion of the lender.

oLocating a lender for consolidation is left to the student. Hence it would be worthwhile to handover the task to an agent.

oYou can repay your debt faster by increasing your monthly payment and specifying that it is towards the principal.

oTimely repayment enables you to avail certain discounts on interest rates.

oFederal Loans cannot be consolidated with other kinds of loans, while private loans can.

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