Graduates Beware! Do Not Consolidate Student Loans Without Proper Research!

Are you a student thinking about loan consolidation? You must conduct proper research prior to consolidating your student loans. Loan consolidation is not an easy task and requires careful consideration and research. It is essential that you equip yourself with proper knowledge and information about student loan consolidation in order to avail the best possible consolidation plan perfect for your needs.

Why Consolidate Student Loans?

A great scholar once said three kinds of things are a source of happiness for individuals – Good Health, Freedom from Debt and Clear Conscious. Student loan consolidation is the Holy Grail for debt-ridden students that help them attain that elusive happiness. It provides relief from the burden of debt and prevents defaulting on these loans.

Loan consolidation provides numerous benefits to students. Some of these benefits include:
1. Fixates interest rates for the duration of the loan
2. Consolidates multiple loan payments into single monthly payment
3. Offers the flexibility of paying loan amounts according to monthly income
4. Does not require good credit score to qualify for the consolidation plan
5. Enables you to set your financial goals for gradual retirement of the loan amount

Read these effective tips on student loan consolidation to understand how to get the best terms and conditions for refinancing the loans to match your needs.

Research Tip #1 Find out the Impact of Consolidating Student Loans
Before consolidating the loans, you should find out the effect of merging multiple loans with different terms and conditions. Sometimes the different interest rate on these loans increases the debt burden on consolidating the loans.
For example, consolidation of Harvard and Perkins loans results in increased interest payment rather than reduce payments on consolidation. Whereas, Stafford loans can easily be consolidated without losing any benefit of consolidation.
Hence, you should research properly and determine the impact of consolidating the loans before applying for the program.

Research Tip #2: Avoid Joint Consolidation of Loans
Join consolidation refers to merging student loans of two or more individuals. In case you and your spouse are both burdened with student debt, you should research properly before considering the option of joint consolidation. Instead of sharing the debt burden, joint consolidation doubles the strain of financing the loan in the long term. The reason is that joint consolidation treats the partners as two individuals and not one. So, in cases of unemployment or uneventful demise of one of the partners they cannot apply for deferment of payment unless both of them become unemployed or pass away. Furthermore, in cases of divorce, it will create difficulties in case one ex-partner does not pay the required amount on time.

Research Tip #3 Find out Tax Benefits on Student Loans
US citizens can avail tax reduction according to IRS income form 1040 and 1040A. You should study these sections properly to find out how much tax benefit you can avail apropos to your student loans. Through proper research, you can find out how to avail tax reduction of as much as $2,500 to your student loans.

The task of consolidating the loans can be a difficult process for most students. That is why a professional student loan consolidation experts can help you maximize the benefits associated with consolidating the loans. These experts can provide qualified advice and guidance so that you can obtain the most advantageous refinance terms and conditions on student loan consolidation.


Top 5 Advantages of Consolidating Student Loan Debt

Graduation is no doubt one of the most memorable moments in a person’s life. It signals closing stages of the carefree life that we have become accustomed to and entering a more responsible phase of adulthood. However, graduation day also reminds us of the fact that the grace period for paying off those student loans is about to end after which you have to start making payments to back the loans.

Various financial assistance programs are available for graduates, to assist them with making payments on their student loans. Consolidating student loan debt offers various benefits in financing the loans.

Benefit #1: Streamlined Payment Process
One of the foremost benefits of consolidating student loan debt is that it streamlines your monthly loan payments. How is that possible? Consolidating the loans merges you previous loans into one single amount that you have to pay at a specified period. The lender who consolidates your loans will take care of you previous loans and issue a new loan with better loan terms and conditions. A streamlined payment process makes it easy for you to finance the loan and avoid the prospect of defaulting on payments, which has various repercussions.

Benefit #2: Reduced Interest Rates on Loans
Consolidating the loans usually results in reduced interest rates. Consolidating student loan debt entails a new interest rate that is calculated from the interest rates of previous loans. This normally results in overall reduction in interest payments on loans.

Benefit #3: Tax Benefits and Relief
Another benefit of consolidation loans is that it is tax deductible. This can offer savings in excess of $2,000. (Please refer to IRS Publication 970 chapter four for more details!) This greatly eases the debt burden and prevents defaulting.

Benefit #4: Extension in Repayment Term
Consolidating student loan debt also extends the payment period of loans, ultimately resulting in reduced monthly payments. This extended payment period means that you do not have to fret over any looming deadlines and that you can focus on making payments for the loan amount. This also allows you to save money for such necessities of life like your own home, retirement income, and a car.

Benefit #5: Fixed Interest Rate for the Loan Term
Student loan consolidation fixates interest rates for the duration of the loan. This allows you the luxury of knowing the exact monthly amount you have to pay to pay back your loans. You save yourself from any surprise increases in interest rates that might make financing a loan difficult.

The tasks and paper work required in student loan consolidation can be overwhelming and complex for many people. In order to obtain maximum benefit from consolidating your loans, it is important that you should get professional guidance and advice. Qualify with a service provider and see how you can benefit.


Is Federal Student Loan Consolidation the Right Option for You?

Most students in the US are overburdened with an average debt of around $26,000. Students graduate not with the feeling of triumph and elation but with gloom and despair. The current economic scenario has made it difficult to secure a high-paying job right after graduation. It takes time for graduate students to obtain a lucrative job offer. However, the loan interest amount keeps on accumulating during this period making it difficult to finance student loans.

At the present, two out of every three graduating students is suffering from the pain of private and federal student aid or loans. If you are also one of these students facing the same dilemma then you should note that you have to act early to get relief from your debts. The best respite from the scourge of these private or federal student aids is to consolidate these loans and get relief from the debt.

However, you should also know that the Federal student loan consolidation program is not for everyone. There are certain pros and cons relating to student loan consolidation that you should be aware of prior to consolidating your student loans.

Student Loan Consolidation – Benefits and Downsides

Student loan consolidation merges all you previous loans into one loan that you have to pay at a specified future date. You can merge both private and federal student aids and loans. Upon consolidation, your loan repayment period extends with the prospect of reduced interest rates. These two factors make it possible for you to hand out lower monthly payment in lieu of the amount of the loan.

The concept of student loan consolidation may seem like the perfect panacea for all your debt troubles. However, you may find that there are certain drawbacks in the student loan forgiveness program. Although the interest rate may reduce on consolidation, in addition to the extension of the repayment period, it also results in an extra net payment on account of loans. Since the duration of the loan increases, the interest rate accrued on these loans accumulates resulting in an increase in the net loan amount due. Whether you want to consolidate private or federal debt aids, it is essential that you get professional help and advice to consolidate your loans in order to obtain optimum benefits on consolidation.

Is Student Loan Consolidation Right for You?

The first thing you need to determine before consolidating your private and federal aids and loans is to determine your objective of consolidation. If you want to gain in the short term in exchange for a higher net loan amount then student loan consolidation is perfect for you. However, it is advisable that you obtain professional help and advice on student loan consolidation. This will ensure that you get the most optimum benefit on consolidating your multiple loans.


Why Consolidate Student Loans Debt?

Student Debt Consolidation – Get Relief from Student Loans

In a nutshell, student debt consolidation is a loan refinancing program that makes it easier for students to make monthly loan payments and avoid default. The process involves a lender paying out previous loans and offering a new loan with softer terms and condition. All the prior loans are merged into a single loan with generally reduced rate of interests.

The rate of interest on a consolidated loan is determined by taking a weighted average of rate of interest on previous loans. This normally results in making reduced interest payments as compared to those paid on individual loans. However, you should be aware that consolidating certain loans results in an increase in the rate of interest. Getting professional advice ensures that the debt consolidation results in relief from the debt burden rather than further exacerbation of the problem.

Debt Consolidation Options –Private Loans and Government Loans

Student loan consolidation is not an easy task. As mentioned, consolidation of certain loans results in an increase in debt burden rather than providing relief from the debt. This is especially the case when consolidating some government loans like Harvard and Stafford loans with private loans. You can lose the benefits attached with these loans on consolidation thereby increasing the debt burden. Therefore, you should try consolidating such government loans separately to avoid losing the benefit attached to these loans.

That is not to say that you should consolidate each and every government loan separately. There are certain cases when consolidating private and state loans provide benefits in terms of significantly reducing monthly loan payment. So, how do you determine the best course of action regarding private and state loans consolidation?

The first choice is to conduct extensive research relating debt consolidation before applying for such loans. Specifically, you should know about the eligibility criteria, consolidation process and options trend reports, latest bills and other aspects of debt consolidation.

And the second choice available for you is to let professional consolidation firms handle the case of debt consolidation for you. These professionals know the nitty gritty of the debt consolidation process. They can provide valuable guidance and advice in preparing for your debt consolidation with a greater possibility of getting the best possible terms and conditions on your consolidated loans.

Successful student debt consolidation requires proper research and guidance. The debt that allowed you to finance your graduation cannot be paid back unless you secure a steady and stable job, which takes time. That is why it is important that you should get help as soon as possible and consolidate your loans to avoid defaulting on them.

debt relief ahead

Effective Student Debt Forgiveness Guidelines

Most students hastily obtain a student loan without thinking about the complication of availing these loans. There is a diverse range of student loans that entail different terms and conditions. Changing policies regarding these student loans have impacted both the federal and private lending practices.

Understanding the types of student loans and the student debt forgiveness programs available for you will make it easier for you to finance these loans.

1. Recognize That Not All Debts Are the Same

Many students obtain loans with the standard payment plan. They think that they will effortlessly make the monthly debt payments during the duration of the debt. This is not necessarily true.

The interest rate on the standard student loans varies during the duration of the debt. As of July 1 2013, the government has revised long-term T-Bills rate that has resulted in drastic changes in the monthly financing of student loans.  The best solution to this dilemma is to opt for a targeted student loans repayment plan. This allows you to pay back your student loans at an earlier period that prevents exposure to rising interest rates in the future. Apart from this, there are several other federal loan repayment options such as an extended payment plan (ERP), forbearance and Federal Public Service Loan Forgiveness (PSLF) etc that gets you relief in financing your student loans.

2. Recognize That Not All Choices Will Suit Your Requirements

A number of different debt relief options are available for the students. Most students are not aware of the eligibility requirements, benefits, implications, or even the existence of such loans. They miss the opportunity of benefiting from such loans that they could have easily obtained with just a little effort and research.

Some of the choices available for student loans include the Pay as You Earn (PAYE) program, Public Service Loan Forgiveness (PSLF) program, and Income Based Repayment program (IBR).

• Public Service Loan Forgiveness (PSLF) program: PSLF program allows tax-free loan clemency of federal loans provided you have made 10 years or 120 regular payments on the loan amount. In exchange for student loan forgiveness, you may be required to serve a number of years in public institutions.

•Income Based Repayment program (IBR): An IBR plan allows you to limit your monthly payment to 15% of your discretionary income. In addition, the government will subsidize outstanding interest for up to three years of availing the repayment plan. What’s more, if you have regularly paid all the payments of the loan for the last 25 years, you do not have to pay any more in lieu of outstanding loan amount.

• Pay as You Earn (PAYE) program: This scheme is identical to the IBR program with the exception that the monthly payment can be reduced to 10% of your discretionary income. Moreover, the forgiveness period can also be reduced by 5 – 20 years of qualified monthly payments. This scheme, however, is limited for Federal loans disbursed after October 1, 2011.

Knowing your options regarding student loans will make it easier to finance the loan and avoid defaulting on these loans. You should contact professional experts to guide you in this matter so that you can avail the best debt relief program suitable for your needs.

Are You Struggling With Student Loans? Consolidate Student Loans to Get Relief! Part II

This is the second part of our post about consolidating student loans. In the first part, we had talked about the student loan consolidation process and the eligibility requirement for consolidating student loans. In this post, we will discuss the types of loans that are and are not qualified for consolidation.

Loans that are eligible for the student loan consolidation program include both subsidized and unsubsidized loans.

Loans Allowed for consolidation:

A. Subsidized Loan
• Direct Subsidized Loans
• Federal Insured Student Loans (FISL)
• Subsidized Federal Consolidation Loans
• Guaranteed Student Loans (GSL)
• Subsidized Federal Stafford Loans

B. Unsubsidized Loan
• Auxiliary Loans to Assist Students (ALAS)
• Consolidation Loans
• Direct Unsubsidized Loans
• Health Professions Student Loans (HPSL)
• Perkins Loans
• Stafford Loans
• National Direct Student Loans (NDSL)
• Health Education Assistance Loans (HEAL)
• Direct PLUS Loans
• Loans for Disadvantaged Students (LDS)
• Parent Loans for Undergraduate Students (PLUS)
• Nursing Student Loans (NSL)
• Supplemental Loans for Students (SLS)

Loans not Entitled for Consolidation
You should know that not every loan is eligible for student loan consolidation. Some loans cannot be consolidated as they do not fulfill certain criteria. Some loans that are not entitled to consolidation include the following:
•Primary Care Loans
• PLATO Student Loans
• Law Access Loans
• Medical Assist Loans
• Loans without guarantee of the federal government (both state or private loans)

Advice on Consolidating Student Loans
You should note that all federal loans subsequent to July 1, 2006 entail a fixed interest rate. Since interest rates on consolidated loans are calculated using the weighted average of all loans, you may not get much relief in terms of interest rates on consolidating these loans.

Consolidating your student loans can bring substantial relief only for student loans disbursed prior to July 1, 2006 that include variable interest rates.  Moreover, you are advised not to mix private and federal loans when consolidating your student loans. Consolidating both these loans may cause you to give up certain rights associated with federal loans resulting in higher interest rates with loan terms and conditions of a private lender.

This is also the case when consolidating certain federal loans like the Perkins loans. You should consult a professional student loan consolidation firm to discuss the best option for you. Consulting with the experts will increase the chance of obtaining maximum relief from consolidating your student loans.