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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.

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What Can You Do If Your Student Loan Amount is certified for Student Loan Tax Refund Offset?

Like most people, graduation may be the most memorable occasion in your life. You studied hard to keep up your grades; you sacrificed your time to complete your course work; and you may even have had to go through the process of availing your student loan to cover all your course fees. All this effort culminates in achieving a college degree on graduation day!

However, the warm feeling of finally earning a degree wears off quickly once you find yourself surrounded by huge pile of student debt. Most loan repayment plans commence about six months after graduation. But finding a job with a salary high enough to pay the loan installment amount due is not an easy task. It takes most graduates quite some time to secure a decent paying job. Unfortunately, all too often the defaulted loan ends up on the desk of a debt collection agency.

Some Student Loans Become Certified for Tax Refund Offset

In the U.S., the Department of Education (DOE) refers all defaulted student loan debt claims to the Department of Treasury. The treasury department can request the IRS to offset the loan amount against federal and/or state tax refunds. Tax refund offset means that your state or federal tax refunds would be used to make payments of the student loan amount that is due.

Once the DOE requests the treasury department to collect student loan due from the delinquent borrower, the defaulted student loan becomes certified for tax refund offset. The certified status remains as long as the student loan amount remains due from the borrower or it is legally discharged in the event of bankruptcy.

The certified status of the student loan cannot be made void by making voluntary payments in lieu of the loan installment amount. You may offset the certified student loan tax offset status through payment of the loan amount in full, consolidation, rehabilitation, or settlement for partial payment or cancellation of the loan amount. In other words, the delinquent borrower would have to bring the student loan due back to the current status if he or she would like to remove it from the certified tax refund status.

How Can I Check If My Student Loan Amount Is Certified For Tax Refund Offsets?

Under the current U.S. laws, you would receive a tax refund offset notice from the IRS at the specified mail address. You can then file a request with the Department of Education to review your tax refund status. However, in case you have not updated your current address with the IRS, you may not receive the notice of the student loan tax refund offset.

You can check the status of your federal student loan payable by contacting the Department of Education directly. The DOE will refer you to the assigned debt collection agency that currently holds your debt. You can also contact the Treasury Offset Program (TOP) call center to know whether you student loan amount is certified for tax refund offset.

Department of Education’s customer service number: (800) 621-3115
Treasury Department’s designated offset call center: (800) 304-3107

You can also contact a private student loan consolidation company to discuss various student loan repayment options.

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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.

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Benefit From Private & Federal Student Loan Consolidation

Do you want to know how to get relief in making payment for your student loans? You’re in the right place! Here we will reveal to you the secrets of how to get relief from your student loan debt. Find out more about student debt relief programs that lessen the burden of your student loan financing, so that you can focus on the important things in life!

Student Loan Consolidation – Get Relief from Your Debt
Student loan consolidation is touted as the Holy Grail of getting relief from the shackles of student loans. This student debt relief program merges all your previous loans into one. Not only does it reduce the interest amount, but also the debt repayment duration also increases, which results in lower monthly installments. Generally, the type of loan you have determines the outcome of the loan consolidation program. Both private and federal student loans are treated differently on consolidation.

1. Private Loan Consolidation

Private loan consolidation is relatively difficult than federal loan consolidation. There are certain conditions that the loans have to fulfill to be eligible for consolidation. You must understand that some private loans cannot be consolidated as they do not fulfill the criteria of student loan consolidation. Even if they fulfill the eligibility criteria, sometime consolidating these loans results in increasing the debt burden rather than providing relief from the debt.

Interest rates on private loans are fixed using a weighted average of previous loans’ interest rates. That is why you have to know the correct time to consolidate these loans, so that it can result in securing the best rates. Ideally you should consolidate when the interest rate on loans are low to get the maximum benefit on consolidation. Proper research and timing is the key that can result in saving hundreds of dollars on consolidation. This is why consulting with a professional student loan consolidation company can be so beneficial. You should bear in mind that although you can secure a lower interest rate on consolidation, extending the loan duration means that the net loan amount is greater on consolidation. This happens due to the accumulation of interest rate with the passage of time that results in higher net amount of loan on consolidation. Apart from this, you should also note that your credit history also influences the terms and conditions of the loans. If your credit score is high, you can secure more lenient terms on consolidated loans as compared to a lower credit score.

2. Federal Student Loan Consolidation

The interest rate on federal student loans is secured with the rates set by the government. That is why the interest rate on federal loans is usually lower than private loans. The average interest rate on federal student loan consolidation is usually lower than consolidation of private student loans. For this same reason you should consolidate federal and private loans separately.
Separate consolidation of these loans allows you to retain lower interest rate of the federal loans and avoid the prospect of private loans bloating the interest rates on consolidation.

Moreover, you should note that unlike private student loans, your credit history does not have much bearing on terms and conditions of the federal student loan consolidation. The majority of federal loans are eligible for consolidation making it comparatively easier to consolidate them.

When considering private and federal student loan consolidation, you should get professional student debt relief advice and guidance to ensure that you get the best deal. Unless you have the time and patience to do extensive research about the best course of action relating to consolidation, it is better to let the professionals handle it.

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How to Qualify for Federal Student Loan Consolidation?

Thousands of US students are availing private and federal student loans to finance their studies. Higher education is the stepping-stone of securing a better paying job in the future. Those students that possess a master or bachelor degree have a better chance of being employed in big firms with higher pay prospects.

However, the dilemma is that under the current economic climate getting a lucrative job offer takes time. This means that students who have availed loans to finance their debt will face difficulty in financing their debt upon graduation. Defaulting on the loans will severely hurt their credit score meaning they will have increased difficulty in obtaining loans for such important activities like mortgaging a house, buying a car, and paying off other essential expenses. The perfect answer to these students’ dilemma is consolidating the student loans. Consolidation gives relief to the debt-ridden students by reducing the required monthly repayments and thus avoiding the prospect of default.

How Does the Federal Student Loan Consolidation Process Work?
The student loan consolidation process merges all your private and federal student loans into one single loan. The interest rate on consolidation is normally lower, thus allowing you reprieve from financing the loans.

Consolidating federal student loans is relatively easier than consolidating private student loans.

Federal Student Loan Consolidation
The process and eligibility criteria for federal student loan consolidation are quite different from consolidating private student loans. The interest rate on the consolidated federal loans is calculated using an average interest rate of all the interest rate. If you possess only one federal loan then the interest rate will be determined by the prevalent federal interest rate.

The advantage of consolidating federal loans is that it fixates an interest rate during the duration of the loan. This allows you to know the exact amount you have to pay in terms of the loan and interest rate. It shades you from the prospect of increasing interest rates putting pressure on your finances. Student loan consolidation also extends the repayment period on consolidation, thus reducing the monthly payment amount you have to make in lieu of the student loans.

You should note that not all federal loans are qualified for consolidation. However, the Following federal loans are eligible:
● Federal Nursing Loans
● Direct Loans (Subsidized and Unsubsidized)
● Federal Stafford Loans (Subsidized and Unsubsidized)
● Health Education Assistance Loans
● Perkins Loans
● Supplemental Loans for Students (SLS)
● Direct PLUS Loans
● PLUS loans from the Federal Family Education Loan (FFEL) Program

If you have used the above federal loans, you can easily get relief from the debt through consolidating these loans.
Once you know that your federal loan is eligible for consolidation, you have to contact a student loan consolidation firm in order to consolidate the student loans. First take note of all your accumulated debts, interest rate on debt, loan duration, outstanding loans, and the lenders’ contact details. You have to provide these details to the loan consolidation firm.

The loan consolidation firm will scrutinize your application, verify the details, and then make payments to your existing lenders. You will then have to sign a new contract with the loan consolidation firm detailing the updated interest rate and loan repayment period. Before consolidating your federal student loans, it is essential that you do proper research relating to the consolidation process. You should get expert advice relating to the consolidation process to ensure that you get the most beneficial terms and condition on consolidation.

 

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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.

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The Student Loan Consolidation Process Revealed

The Student loan consolidation process takes around 2 – 3 months during which your application is scrutinized, prior loans are paid off, and a new loan is issued. Your prior loans are paid off by the loan consolidation agency and a new loan account is created with lenient terms and conditions.

The steps involved in student loan consolidation include:

Step 1: Application Evaluation
The first step in loan consolidation is submitting an application with concerned loan consolidation firms. They enter your application in their database and a lot of specific numbers to identify the application. An official will ensure that the application is complete in all aspects prior to sending it for further review.

Step 2: Background Check-up
Loan consolidation firms will then verify the details that the application comprises of. They will get in touch with your lenders to determine the accuracy of information relating to the loan amount and other details. They can also obtain additional information from the lenders such as outstanding balance, fees payable and other details relating to the loan. The loan consolidation firms can either perform this background checkup through e-mail or post. In both cases, a certificate is dispatched to the loan holders who will have to send it back with a proper reply in 10 days.

Step 3: Verification of Consolidated Loans
After receiving the certificate from the loan owners and confirming the detail of loans, the consolidation firm will forward a statement containing verified information relating to the loans. You have to send this statement back to the consolidation firm within 15 days after verifying that the information in the statement is correct according to your information. In case you do not reply within 15 days, the lender considers that you are in agreement with the statement and will proceed further with the loan application.

Step 4: Paying Off Previous Student Loans
Upon completion of the verification process, the loan consolidation firm will make payment for your previous loans contained in the loan application to the lender. The lenders are required to dispatch a repayment notice when they receive payment for the loans. In the case of over or under payment of the loan amount, a federal service firm will decide upon the issue.

Step 5: Setting up the Account
After completion of the above process, the loan official will create a fresh account for paid loans. You will receive a greeting letter specifying that your account has been set up and that your loans have been consolidated.

Conclusion
Student loan consolidation provides innumerable benefits for students. It extends the payment period resulting in a lower monthly payment to finance the debt. Yet, it is not for everyone.

If you possess the financial capability to pay all of your existing debts, then the student loan consolidation may not be right for you. Student loan consolidation no doubt extends the repayment period, but may also result in the accumulation of interest rates that increase the loan amount in the long term. Student loan consolidation is only suitable for you if you cannot afford to make monthly payments to finance the loans. It avoids the prospect of defaulting on the loans and ensures that you pay off the loan amount gradually as your financial situation improves.

If you think that you can benefit from student loan consolidation, you are strongly advised to seek professional help and guidance. These professional advisers can guide you in obtaining the best possible terms and conditions relating to consolidated loans.

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7 Effective Tips for Managing Your Student Loan Payments

Managing student loans is not easy. As if the tense study routine was not enough, students have to constantly face the mental anguish of financing these loans. Just one missed payment of a loan installment could severely impact their credit score. And a low credit score is the last thing students want at this stage in their life. It would lower the chances of obtaining credit to finance essential necessities of life like mortgaging a house or buying a car.

Here are 7 effective tips on dealing with those dreaded student loans. These tips will be helpful to students in avoiding extra charges, penalties and interest payments that would increase the burden of financing these loans. By following these tips, students can effectively manage their debt payments and avoid the prospect of defaulting on their student loans.

1. Make Sure You Fully Understand Your Loans
It is extremely important that you know the complete details about your loans. Apart from the obvious knowledge of loan amount, due date and interest on loans – you should also try to determine hidden cost charges and penalties relating to your loans. Moreover, you should have the contact details of each of your lenders and keep in touch with them to know the status of your loans.

2. Make Sure You Are Aware of the Grace Period
The grace period on private or federal student loans refers to the amount of time you are allowed by the lender after graduation till which you have to start making payment for your loans. Most lenders allow a 6 month grace period, but you should contact your lenders to clarify this matter.

3. Maintain Regular Contact with Your Lenders
It is also necessary to maintain regular contact with your lenders. You should update your lenders about any change in you cell number, email address and other important contact details. You should be aware of any change in policies, fees, or rates apropos your loans so that it does not cause you a shock on approaching graduation day when you have to start making payments for the loans.

4. Avoid Missing Any Monthly Loan Payments
When the grace period expires, it is vital that you regularly pay the monthly installment amount. You should never try to miss any payment as it will negatively reflect on your credit score.

5. Consider Extending You Loan Period
The duration of most private student loans and federal student aids vary. You should select a repayment duration that you feel is suitable for you. Most of these loans are of a ten-year duration. However, if you feel that this duration is not enough for you, you can request your lender to extend the loan duration prior to signing the loan agreement. However, you should note that extending the repayment amount also increases the net amount due as interest keeps on accumulating during the duration of the loan.

6. Consider A Student Loan Consolidation Program to Get Relief
If you have availed multiple private and federal student loans, it is advisable to consolidate these loans to get some relief from the debt burden. Consolidating your loans makes it easy for you to manage the loans in the form of a single loan that has to be paid at a specified date in the future. In some cases, consolidating the loans may also result in reducing the interest rate that remains fixed during the duration of the loan.

7. Get Help from a Student Loan Consolidation Advisor
You should note that student loan consolidation is a complex process. In order to obtain the best terms and conditions on the consolidated loans, you have to know the ins and outs of the loan consolidation process. You should also know the complications of consolidating certain federal aids such as Perkin Loan and Stafford loans with private student loans. Loan consolidation firms are expert in this matter and availing their services will definitely raise your chances of obtaining the loans on best possible terms and conditions that are ideal for you.

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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.

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Obama’s PAYE Student Loan Forgiveness Makes Education Less Burdensome

President Obama announced a brand new set of executive actions that will help lift the burden of student loan debt. Also promised is a radical expansion in the criteria for the alternative student loan repayment program.

An unprecedented number of students are now dependent on student loans to pay for their college education. This is probably the biggest reason why our government believed that actions were necessary to expand educational opportunities to all Americans, making it easier and more manageable for the students to pay off their loans.

Introduced in 2011, the original Pay As You Earn, student loan forgiveness program was providing affordable loan repayment services to 1.6 million borrowers; however, this new amendment will increase its reach to nearly 5 million potential borrowers.

Here’s What Will Happen under the New Rules:

The new executive order will further ease the college debt troubles by allowing borrowers to cap their payments at 10 percent of their monthly income. Quite a number of borrowers already had this facility. This time around, the order includes 5 million more people who weren’t covered previously, and they also include people who got their loans before October 2007.

President Obama’s alternative payment plan helps students in a variety of ways. For example, public-sector employees with regular, on-time payments may see their debts forgiven after some time. Similarly, teachers can also apply to have the rest of their debt cancelled after 10 years of regular payments. While low-income borrowers may see their balance canceled after 20 to 25 years of on-time payments.

The fact of the matter is that many student loan borrowers are working hard and being responsible about their monthly payments, but the debt still remains a very real struggle for them.

President Obama’s student loan forgiveness programs are processed and made available to borrowers now. Click Here for more info.

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