Student Loans

Overwhelmed by Student Loan Debt?

Consider School Loan Consolidation!

Student Loan Consolidation is the perfect solution for people who need help managing their debt. If you have several different loan payments but want to make only one payment per month, you should apply for a Federal Student Consolidation Loan. With Loan Consolidation, your lender will combine your present Loans into one single Loan. If you do decide to Consolidate your Student Loan, you will pay interest on a fixed rate. The rate is determined by the average of your Loans, and is averaged up to the nearest .125 percent. If you make direct Loan electronic payments, you may get a lower interest rate.

Tips On Repaying Your Consolidated Student Loan

Most people use Student Loan Consolidation as a way to manage debts. Most often, Student Loan Consolidation will save money. Be aware that although Student Loan Consolidation reduces monthly payments, it will likely raise the interest amount. Because of this, it is a good idea to try to pay off as much of your Student Loan Consolidation as soon as possible. Do this by trying to increase your monthly payments. Be aware that there are certain deferment programs available. For example, unemployment or economic hardship may cause the Student Loan Consolidation to be reduced.

Parent PLUS Loans

Do you have good credit that you would like to put towards the further education of your child? Is your child planning on becoming a student at an American college or university? Is your child a dependent and planning on attending this college or university as an undergraduate at least “half-time” during the college or university semester schedule? If these questions apply to you, then a parent PLUS loan just may be the best option for financing the education of your child… Read More About Parent PLUS Loans, and Financial Aid College Assistance which includes Scholarships.

Private versus Federal Consolidation Loans – What’s the Difference?

A consolidation loan lets you combine your federal student loans into a single loan with one monthly payment. There are two programs available for consolidating student loans:

The Federal Family Education Loan (FFEL) Program, through which banks, secondary markets, credit unions, and other lenders provide the consolidation loan
The William D. Ford Federal Direct Loan (Direct Loan) Program, through which the federal government provides the consolidation loan

There are several differences between these programs, as outlined in the table below:

FFEL Program

    • Lenders – Banks, secondary markets, and credit unions
    • Loans accepted – Can accept all eligible loans from eligible borrowers, but are not required.
    • Repayment Plans- Offers four repayment plans
      • Standard Repayment Plan
      • Graduated Repayment Plan
      • Extended Repayment Plan
      • Income – Sensitive
    • Repayment Plan (in which the monthly payment amount is set according to the borrower’s income and loan debt)
    • Timing of consolidation
    • Borrowers can consolidate after they have left school and all of their loans are in grace or repayment.

Direct Loan Program

  • Lenders – Federal government
  • Loans accepted – Must accept all eligible loans from eligible borrowers
  • Repayment Plans – Offers four repayment plans
    • Standard Repayment Plan
    • Graduated Repayment Plan
    • Extended Repayment Plan
    • Income – Contingent Repayment Plan (in which the monthly payment amount is set according to the borrower’s income, family size, and loan debt)
  • Timing of consolidation
  • Borrowers can consolidate while they are still in school.

In other ways, the two loan programs are similar:

  • They both have options to allow borrowers who have defaulted on their loans to consolidate those loans.
  • In general, neither of them charges prepayment penalties or origination fees, nor are credit checks or co-signers required. However, some private lenders may charge processing fees.
  • The base interest rate on your consolidation loan is the same regardless of the lender. However, private lenders may offer additional incentives such as a reduced rate if you make your payment on time and if you have your payment automatically debited from your bank account.

Federal Student Loans versus Private Student Loans – which is best for me?

You have gotten all the grants and scholarships you can, but you still need money for your education. It’s time to look at loans. But which is better – federal loans or private loans?

Federal loans

If you need to take out a loan to help pay for your education, you should always look at federal loans first. The largest source of education loans around, federal loans are long-term loans with low interest rates designed for students who need money for their educations. They have several benefits when compared to other borrowing options, including

  • Lower interest rates
  • Options to postpone payments
  • Longer repayment terms
  • Easier credit requirements

Eligibility for some of these loans, such as the Federal Perkins Loan and the Subsidized Federal Stafford Loan, are needs-based, while others are not. You will need to complete a FAFSA to apply for these loans.

The most common federal student loans are listed below:

Federal Perkins Loan

The Federal Perkins Loan is a low-interest loan available to students who have exceptional financial need, based on the information provided on their FAFSA. Undergraduates can borrow up to $4,000 per year, while graduate students can borrow up to $6,000 per year.

Federal Stafford Loan

The Federal Stafford Loan is available to undergraduates and graduate students. Loan amounts depend on a student’s year in school and whether they are financially dependent or independent. Your college’s financial aid office determines your eligibility.

Stafford loans can be subsidized or unsubsidized. Financial need determines which type a student is eligible for. Subsidized loans are based on financial need. The government pays the interest while the student is in school, in deferment, and in their grace period.

Unsubsidized loans are available to all students, regardless of income. The student is responsible for all interest.

Federal PLUS Loan

The Federal PLUS Loan (Parent Loan for Undergraduate Students) is a low-interest education loan for parents. Each year, parents can borrow up to the cost of attendance, minus other financial aid received (scholarships, grants, student loans, etc.).

The PLUS loan is not based on financial need. Qualified applicants must pass a credit check.

Private Loans

Private loans are designed to supplement federal loan programs and are available from schools, banks, and education loan organizations. They are usually used to cover education costs that cannot be met by federal aid.

Terms for these loans vary according to the lender and your credit history. Keep these things in mind as you consider taking out a private loan:

  • Private loans have credit requirements, and you may need a co-signer
  • The lender determines the interest rates and fees, which may be affected by your credit score
  • Private loans may not offer deferment options
  • Private loan programs may offer borrower benefits, such as interest rate discounts or rebates

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