Student Loan Consolidation - How does it Work?

Student loans are a great source of financial aid for students who need help paying for their education. Unfortunately, students often leave college with burdensome debt. In addition, they often have multiple loans from different lenders, meaning they are writing more than one loan repayment check each month. The solution to this problem is loan consolidation.

What is loan consolidation?

Loan consolidation means bundling all your student loans into a single loan with one lender and one repayment plan. You can think of loan consolidation as akin to refinancing a home mortgage. When you consolidate your student loans, the balances of your existing student loans are paid off, with the total balance rolling over into one consolidated loan. The end result is that you have only one student loan to pay on.

Both students and their parents can consolidate loans.

Should I consolidate my loans?

Loan consolidation offers many benefits:

• Locks in a fixed, usually lower, interest rate for the term of your loan, potentially saving you thousands of dollars (depending on the interest rates of your original loans)
• Lowers your monthly payment
• Combines your student loan payments into one monthly bill

In addition, consolidated loans have flexible repayment options and no fees, charges, or prepayment penalties. There are also no credit checks or co-signers required.

You should consider consolidating your loans if the consolidation loan would have a lower interest rate than your current loans, particularly if you are having trouble making you monthly payments. However, if you are close to paying off your existing loans, consolidation may not be worth it.

How will the interest rate for the consolidated loan be?

The interest rate for your consolidated loan is calculated by averaging the interest rate of all the loans being consolidated and then rounding up to the next one-eighth of one percent. The maximum interest rate is 8.25 percent.

To figure your interest rate, visit loanconsolidation.ed.gov for an online calculator that will do the math for you.

How much can I save?

How much you save by consolidating loans depends on what interest rate you get and whether you choose to extend your repayment plan. According to Sallie Mae, the leading provider of student loans in the United States, consolidating student loans can reduce monthly payments by up to 54 percent. However, the only way to reduce your payment this much is to extend your repayment plan. You typically have 10 years to repay student loans, but, depending on the amount you're consolidating, you can extend your repayment plan all the way up to 30 years. Remember that if you choose to extend your repayment term, it will take longer to pay off your overall debt and you'll pay more in interest. There are no preypayment penalties, so you can always choose to pay off the loan early.

Am I eligible to consolidate my loans?

In order to consolidate your loans, you must meet the following criteria:

• You are in your six-month grace period following graduation or you have started repaying your loans
• You have eligible loans totaling over $7,500
• You have more than one lender
• You have not already consolidated your student loans, or since consolidation you have gone back to school and acquired new student loans

The following types of loans can be consolidated:

• Direct Subsidized and Unsubsidized Loans
• Federal Subsidized and Unsubsidized Federal Stafford Loans
• Direct PLUS Loans and Federal PLUS Loans
• Direct Consolidation Loans and Federal Consolidation Loans
• Guaranteed Student Loans
• Federal Insured Student Loans
• Federal Supplemental Loans for Students
• Auxiliary Loans to Assist Students
• Federal Perkins Loans
• National Direct Student Loans
• National Defense Student Loans
• Health Education Assistance Loans
• Health Professions Student Loans
• Loans for Disadvantaged Students
• Nursing Student Loans

Where can I get a consolidation loan?

You can consolidate your loans through any bank or credit union that participates in the Federal Family Education Loan Program, or directly from the U.S. Department of Education. The loan terms and conditions are generally the same, regardless of where you consolidate. You may want to check first with the lenders that hold your current loans.

If all your loans are with one lender, you must consolidate with that lender.

If you decide to consolidate your student loans, remember that you can only do so once unless you go back to school and take out more loans. Therefore, you will want to make sure you get the best deal the first time. The interest rate will be the same from all lenders, but some lenders may offer future rate discounts for prompt payment and a discount for having monthly payments directly debited from your account.

Can my spouse and I consolidate our loans together?

You can consolidate your loans together, but it is not a good idea for a couple reasons:

• Both of you will always be responsible to repay the loan, even if you later separate or divorce
• If you need to defer payment on the loan, both of you will have to meet the deferment criteria

When should I consolidate my loans?

You can consolidate your loans any time during your six-month grace period or after you have started repaying your loans. If you consolidate during your grace period, you may be able to get a lower interest rate. However, since you will lose the rest of the grace period, it is a good idea to wait until the fifth month of the grace period before consolidating. The consolidation process usually takes 30-45 days. Source:www.nextstudent.com

Financial Aid Top Tips

The financial aid process is inherently complex. But we’ve made it simpler with a list of Top Tips—our best advice for helping you maximize financial aid eligibility and “ace” the financial aid process.

Tip: Get a jump on the process
Most families that have been through the financial aid process will say they should have started the process sooner. Even in high school, there are important steps you can take to prepare for college. If you’ve already graduated high school, start the process now—scholarships are snatched up quickly, and you’ll want to have your FAFSA submission ready by early January to ensure your place in the federal aid queue.

Tip: First-come, first-served
Submit your FAFSA as early as possible (after January 1). The amount of need-based financial aid available is limited, and is awarded on a first-come, first-served basis. Don’t wait until you’ve filed your tax return; estimate the required tax information and file an amendment to your FAFSA later if the actual numbers are significantly different. You can also shave weeks off the process by submitting your FAFSA online at www.FAFSA.ed.gov.

Tip: Accuracy counts
Submit your FAFSA carefully and submit it correctly. If your application contains errors or incomplete responses, it will be returned to you. The correction process could take weeks—weeks that will move you further back in the financial aid queue. Since most need-based financial aid is awarded on a first-come, first-served basis, these few weeks could seriously impact your financial aid package. See Tips on Completing the FAFSA for more information.

Tip: Save money for college
While family assets are a factor in financial aid eligibility, it still makes sense to save for college. In the Expected Family Contribution calculation, only 5.6% of a family’s assets and 20% of a student’s assets are considered “available for college contribution”. In other words, your savings will reduce the amount of aid you can receive, but not by much. More importantly, you will be expected to contribute some amount of money toward college, and it’s cheaper to use savings than to borrow against credit cards or home equity.

Tip: But spend money, too
Students are expected to contribute 20% of their own money toward college costs. The less money the student has, the lower your Expected Family Contribution. If you’re planning any big purchases, consider using money currently held in the student’s name instead of parent savings or consumer credit.

Tip: Save money in the parents’ name
While there are potential tax benefits to saving in your child’s name, there are also potential financial aid implications. Parent assets are factored into the Expected Family Contribution at a low rate—5.6%, while student assets are assessed at 20% of assets and 50% of after-tax income over $1,750.

Now is the time to build up retirement savings. These funds are shielded from the EFC calculation, so you can contribute as much as you want to IRAs or other retirement accounts without impacting financial aid eligibility.

A 529 savings plan, such as the NextStudent Scholar’s Edge^TM plan, allows you to contribute to a tax-deferred account established for the student, but in the parents’ name.

You can also save money in accounts held in other family members’ names. Only parent and student assets are considered in the EFC calculation.

Tip: Make it a family affair
The federal government aid programs were designed to help families pursue their college dreams, and reward those that have more than one Dependent student enrolled at the same time. In fact, your Expected Family Contribution may drop as much as 50% if more than one family member attends college.

Tip: Don’t settle
If you’re not happy with the financial aid packages you’re offered—negotiate. The final packages are developed by school financial aid officers, and they may not fully understand your financial situation. Talk to them. Ask them how they arrived at the final numbers. Help them understand your position. Each school’s package may be different, so don’t give up until you’ve tried them all.

Tip: Don’t stop
Start looking for scholarships and apply for grants and work-study as soon as possible, and don’t stop looking until graduation looms near. Your financial situation or academic record could change over the years, and these changes could impact your eligibility. And, free money is awarded for a variety of reasons—not just financial need or GPA, so you may already be eligible for more than you think. To find free money, check out the NextStudent Scholarship Search Engine, one of the most comprehensive databases of over 2.4 million awards totaling more than $3.4 billion.

Tip: Don’t assume
Just about every family is eligible for some financial aid—even those that think they earn too much or don’t know enough about their options. Fill out the FAFSA and let the Department of Education determine the amount of financial aid you’re eligible to receive. They’ll consider a number of factors—including college costs, financial need, and non-need based criteria, such as academic performance, ethnicity or nationality, and special aptitude for athletics, music, art, leadership or other criteria.

You’ll need to fill out the FAFSA for any type of funding; there is no other way to get government help. Remember, some sources of aid, such as unsubsidized Stafford and PLUS Loans, are available regardless of need.

Tip: Start low
Focus first on the lowest-cost aid, such as scholarships, grants and work-study. These cost you nothing because they don’t have to be repaid. If free money isn’t enough to pay for college, look next to low-cost student loans, such as the Federal Stafford Loan, next. Rates for these loans are among the most favorable, and repayment is deferred until after graduation. Your next best bet is Federal Parent PLUS Loans, followed by private, or alternative, loans. Avoid high-cost financing, such as home equity loans or credit cards—not only do these carry a high rate of interest, they also require immediate repayment and can jeopardize your financial status.

Tip: Aim high
Don’t turn your back on your dream school just because it’s expensive. Your Expected Family Contribution (EFC) is based on your financial situation and is the same regardless of the school you attend. Your financial aid package, on the other hand, is based on the cost of attendance minus your EFC so that a more expensive school may result in a more substantial financial aid package.

Tip: Apply for loans
You can initiate a student loan at any time by applying online for a Federal Stafford, Federal Parent PLUS or NextStudent Private loan. Even if you haven’t submitted the FAFSA, you can get the process started, and complete it when you receive your financial aid package. Once you receive that package, usually in April, you’ll have just a few short months to before school starts to secure your loans.

Tip: Consolidate your loans
Federal consolidation is one of the smartest, most economical repayment tools available. This program allows you to consolidate one or more eligible loans into a single new loan at a great, low rate—and no additional fees. Right now consolidation Loan rates are as low as 4.5%. For most, this means a savings of more than 60%, plus the convenience of making a single payment and possibly extending the repayment period for even lower monthly payments.

Tip: Stay on track
The financial aid process can be long, and there are so many things to remember. Make photocopies of all forms and applications, and keep them in a handy file. And sign up for NextPath, the customized message service that notifies you about important financial aid deadlines, tells what you should be doing and when, and offers up-to-date student loan news so you won’t miss out on college funding opportunities.

Tip: Get help when you need it
Unless you’re a financial aid officer, you probably have questions about the process and the types of aid available. Call us. We have professionally trained Education Finance Advisors who can answer just about any question you may have about financial aid, and who will be happy to guide you through your loan applications. Source:www.nextstudent.com

Student Loan Consolidation: Turn Your Variable-Rate Student Loans Into One Fixed-Rate Loan

Although Federal PLUS Loans and Stafford Loans are currently issued at fixed interest rates, PLUS and Stafford loans issued prior to July 1, 2006, are variable-rate student loans. The interest rate on these college loans adjusts every year on July 1.

If you’re a PLUS or Stafford borrower with one of these variable-rate loans, your monthly payment amount could fluctuate from year to year, depending on your adjusted rate. When interest rates go up, the monthly payments on your federal parent and student loans may also go up, putting a bigger dent in your budget than you may have planned.

Lock In Your Monthly Payments With Student Loan Consolidation

If you wish you could do away with the uncertainty of variable interest rates and potentially higher payments, NextStudent’s student loan consolidation program could be the solution you’re looking for.

NextStudent Federal Consolidation Loans give you the security of a fixed interest rate. By consolidating your federal college loans with NextStudent, a leading Phoenix-based education funding company, you’ll replace your variable-rate parent and student loans with a fixed-rate student loan consolidation.

With a federal student loan consolidation, you’ll never have to worry about rising interest rates leaving you guessing about your monthly payment amount and whether you’ll have enough room in your budget.

Cut Your Monthly Payments on Your Student Loans by up to 40%

Besides offering you the stability of a fixed interest rate, NextStudent consolidation loans could also cut your monthly student loan payments almost in half.

The standard repayment term for Stafford and PLUS loans is 10 years. But when you consolidate your parent or student loans with NextStudent, you may be able to extend that 10-year repayment term by up to 20 years to a 30-year repayment term. By extending your payments over a longer repayment term, your student loan consolidation could lower the amount you have to pay each month.

Consolidate your college loans with NextStudent, taking advantage of that longer repayment term, and your monthly student loan payments could go down by up to 40%!

Hassle-Free Repayment for Your Student Loans

If you have several parent or student loans in repayment and you’re juggling multiple bills, multiple due dates, and multiple monthly payments to multiple lenders, a student loan consolidation could help make your student loan repayment easier to manage.

With NextStudent’s student loan consolidation program, you can bundle your entire eligible federal parent or student loans into one single fixed-rate consolidation loan—that means just one monthly bill and only one monthly payment you’ll have to make. And that payment amount is fixed for the life of your student loan consolidation.

Fast, Easy, and FREE: Apply in Minutes to Consolidate Your Student Loans

You can apply for your NextStudent consolidation loan in minutes, either online or with a quick phone call. It’s fast, easy, and free to apply, and there are no credit checks, so you won’t need to worry about finding a co-signer.

1. NO fees
2. NO credit checks
3. NO co-signers required

You don’t need to worry about prepayment penalties either. There are no prepayment penalties on NextStudent Federal Consolidation Loans. When you consolidate your federal parent or student loans with NextStudent, you’ll never be charged extra for paying more than the minimum each month or for paying off your consolidation loan early.

Consolidating Your Federal Student Loans

To be eligible to consolidate your own federal student loans, you can’t currently be enrolled in school more than half time. The student loans you’re looking to consolidate must be in repayment, in a grace period, or in an authorized deferment or forbearance period.

If your parents have Federal PLUS Loans that they took out to help you pay for school, they’re also eligible for NextStudent’s student loan consolidation program. And your parents don’t have to wait for you to graduate in order to consolidate their own loans: Your parents can consolidate the PLUS loans they took out for your education as soon as the PLUS loans have been fully disbursed and have entered repayment, even if you’re still in school.

Although your parents can consolidate their federal PLUS loans, you won’t be able to consolidate your own college loans together with your parents’ loans.

Student Loan Consolidation for Your Private Student Loans

If you have private student loans in addition to (or instead of) your federal student loans, you won’t be able to consolidate your private loans with the federal student loan consolidation program. But if you’re looking for the same convenience of a single consolidated loan for your private student loans, you may be eligible to consolidate your private student loans separately with a NextStudent Private Consolidation Loan.

Posted by Yusron at 3:09 PM 0 comments

Staying in touch with the international conference calling options

Staying in touch with the international conference calling options

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International Conference cheap calling affordable

International Conference cheap calling affordable

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The advantage of affordable conference

The advantage of affordable conference

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