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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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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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Recognize the Downside Consolidating Student Loan Debt

If you are burdened with federal or private student loans, you may have heard about student loan consolidation programs that can offer relief from your debt. But before you apply for a loan assistance program, it is imperative that you know the cons of consolidating student loan debt. Understanding certain aspects of the student loan consolidation program helps you to gain greater benefits from the student loan program. Knowing the drawbacks of consolidating student loan debt will allow you to get a clear picture of getting optimal refinance terms and conditions suitable for your needs.

Drawback #1: Your Loan Amount May Increase on Consolidation

One of the cons attached with student loan consolidation is that the actual loan amount increases with consolidation. You get relief only in the form of lengthening the duration of the loans thereby paying reduced monthly installments on the loan. The overall loan amount increases as you might have to pay greater interest payment when you consolidate your loans.

However, the good news is that you could end up paying a lower interest rate on the consolidated loans. When you consolidate the loans, a new loan is created with revised terms and conditions. So, with proper research and guidance, you can agree on the “right” loan term and rates from the lenders. In addition, consolidated loans are tax deductible which means that you can save more than $2000 on the process.

Disadvantage #2: Your Loan May Get Locked Up with Fixed Interest Rate

Another drawback of student loan consolidation is that your loan amount may become locked with a fixed interest rate. Consolidation involves taking a weighted average of previous loans and fixes a new interest rate for the duration of the loan. Although this provides protection against rising interest rates in the future, you may not benefit if there is a decrease in interest rate.

However, fixing the interest rate allows you to know exactly how much payment you have to make without any surprises. You can effectively budget your finances with the peace of mind that the monthly loan payment will not increase in the future impacting other vital expenses. Consolidating your federal and private loans provides you with much needed financial relief and assistance. It gives you the flexibility of financing your outstanding loan and making payments for the necessities of life without much difficulty.
Are you qualified for student loan consolidation? Click here to see if you qualify for student debt relief.

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Consolidating Student Loan Debt

About the Student Loan Consolidation Program

Student loan consolidation combines all of your previous loans into one single loan that is paid off at a specified date. The benefit of consolidating student loan debt is lower monthly payments to finance the debt. This also allows you enough time to get a steady and stable job to ensure that you easily pay off the debt within time. Consolidating your federal student loans requires that you fulfill certain criteria to become qualified

Federal Student Loans
You should be glad to hear that majority of government student loans are qualified for consolidation. Some of the federal student loans that are eligible for consolidation includes:

  • Supplemental Student Loan
  • PLUS Loans
  • Federal Nursing Loans
  • Direct Subsidized or Unsubsidized Loans
  • Health Education Loans
  • Subsidized and Unsubsidized Stafford Loans
  • Federal Perkins Loans
  • PLUS loans (Feel Program)

Fulfilling the Eligibility Criteria

You should note that you must fulfill certain conditions to become qualified for consolidating student loans. One of the conditions to avail this debt relief program is that at least one of the loans should be within the allowed grace period. Moreover, you have to make an agreement with your previous lenders relating to loans that you have failed to pay prior to consolidating student loans.

Prepare Yourself Before Applying for Consolidation
The importance of doing proper research before applying for consolidation cannot be emphasized enough. Although you may be qualified for consolidating, sometimes your debt burden increases with consolidation. Furthermore, you should remember that whether loan consolidation is right for you or not depends upon how much you can forego in order to get relief from your debt burden. Consolidating your student loans extends the repayment period that results in lower monthly payments, but it also increases the amount of interest rate on the loans.

Getting guidance from professional loan consolidation counselling firms is the best option to ensure that you get the best terms and conditions on consolidating your loans. After all, you want to get relief from your debt burden and not overburden yourself with debt.

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Are You Thinking About Consolidating Student Loan Debt for a Private Loan?

Student loan consolidation allows you to get relief from the burden of debt. Thousands of students in US have benefited from the debt relief programs. Consolidating student loan debt reduces your monthly debt repayment, allowing you to finance your debt and avoid defaulting on the loans.

You have two options when consolidating student loan debt:
• Private Student Loans
• Federal Student Loans

Federal student loans are loans disbursed by government institutions, while private student loans are loans that are obtained from private institutions such as banks and other financial loan firms.

Statistics show that more and more US students are availing private student loans to fund their education. The problem is that repaying these loans is not an easy prospect, especially under the current economic scenario. It takes time for a graduating student to secure a profitable job and finance these loans. Student loan consolidation merges various student loans into a single loan and extends their repayment period. This lowers the monthly payment required to finance the debt, thus considerably easing the debt burden.

How You Can Consolidate Private Student Loans?
To consolidate private loans, you have to contact your original lenders and tell them that you are facing extreme difficulty in financing the debt. You should ask the lender to come up with new terms to extend the repayment period of the loans. Since lenders want their loans back, they will be open to any negotiation regarding the loans.

If you have multiple private student loans, you have to request any one of your lenders to pay all your other loans and come up with a new single loan payable at a specified future date.

You have to keep in mind that your FICO score will influence the interest rate that you obtain on consolidating these loans. It is highly recommended that you take the necessary steps to preserve this score. For instance, you could pay off the amount you owe on your credit card if it results in lowering the FICO score. You should also avoid missing the payment of your existing loans that could negatively affect the score. Maintaining a good FICO score is crucial in obtaining the best terms and condition for the consolidated loan.

Other Methods of Consolidating Student Loans

In case no lender is willing to negotiate the loans, then you should note that there are other options available for you to consolidate the loans. However, it requires some extra effort on your part.

• Obtain Additional Private Loans
You can obtain additional loans from different lenders to pay off your existing loans. The benefit of this option is that it merges all your private student loans into one loan resulting in a single monthly payment. It also extends the repayment period allowing you to finance the loan and avoid defaulting on the loan. However, obtaining additional loans also increases the interest rate that you have to pay during the duration of the loans.

•Utilize Credit Card Loans
Another option is to utilize credit card loans to pay off all your existing loans. The downside of this option is that it is an expensive option that may not give any benefits since the transfer rate itself comes to 3-5%. But the advantage of this option is that you have to make only one single payment resulting in fewer chances of missing the payments.

These are just some of the methods of consolidating your private student loans. You should note that consolidating private student loans entails greater complexity compared to federal student loan consolidation. That’s why it’s advisable to consult a professional consolidation adviser firm prior to taking any action in regards to consolidating your student  loan. This will allow you to avail the best option resulting in relief from the debt burden.

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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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What Impacts Federal Student Loan Consolidation?

Federal student loan consolidation makes it easier for you to finance the loans and avoid defaulting on your payments. There are many important yet often misunderstood aspects of student loan consolidation that make federal student loan consolidation confusing. Read on to get some clarity on the process:

A Good Credit Score Positively Influences Debt Consolidation

A good credit score has a strong bearing on obtaining better terms and conditions on federal student loan consolidation. Consolidation firms look at your FICO score to make decisions about the consolidated loans. Even though this score does not strongly influence consolidation of federal loans, it has a strong influence on the favorable or unfavorable outcome on consolidation of private loans. Generally, a weak credit score does not result in favorable outcome on consolidating private loans. It may even result in increasing the interest rate thus overburdening you with debt rather than providing relief from it.

Debt Consolidation Allows Relief From Debt…. Not Release From the Debt

A number of students assume that student loan consolidation provides them an avenue to completely get rid of their debts. They wrongly believe that it’s a shortcut to release them of the responsibility of paying the loan. The reality is that debt consolidation allows you relief from the debt burden, but not necessarily release from it. The loan amount does not decrease on consolidation, but only the repayment period and/or interest rate is reduced on the loan.

Debt Consolidation Does Not Require Insuring Your Credit

Another important thing to remember about loan consolidation is that you do not have to pay any amount to insure your credit. Many students have reported that their loan consolidation firms pressurize them to obtain insurance for their loans. This is not a requirement for consolidating the loan and rather increases the cost of financing your loans.

Negotiate With Your Lenders on Defaulted Debts

Prior to applying for a loan consolidation you are required to negotiate with your lenders on defaulted loans. This allows you to obtain negotiated terms and agreement of the loan amount that will be paid by the consolidation firm on merging the loans.

Debt consolidation is not an easy matter. It requires proper research and knowledge of finer details regarding the process. It is advisable to consult a professional student loan consolidation adviser to properly guide you in consolidating your 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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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.

Conclusion
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.

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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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