Consolidation of student loans

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The advantages

If student loan debt is a heavy burden for the month you or your family, you are not alone. And if the monthly payment is so unmanageable that you may have already missed payments, or the risk of default, loan consolidation may be right for you.

A consolidation loan is exactly what it sounds like. With a loan consolidation program your high interest student loans are combined into one, sometimes lower interest loan with a lower monthly payment, you need to just one lender.

Consolidation loans are like the same idea of refinancing a mortgage or a home equity loan to credit card debt or pay off other high interest loans. Just about any type of Federal Student Loan qualifies for loan consolidation, including; FFELP, FISL, Perkins, Health Professional Student Loans, NSL, heal, guaranteed student loans and direct loans. In some cases, loan consolidation is also available for private education loans as well. Loan consolidation for loans for students, either undergraduate or graduate schools.

Interest rates on consolidated student loans are calculated by a weighted average of the loans are consolidated, and then rounded to the nearest 1 / 8 percent. The new interest rate may not exceed 8.25%.

For example, we say that a student has a few originate Stafford loans, on or after July 2006. The fixed interest rates on these loans would be 6.8%. If only these loans, the resulting new rate would be 6.875%, a statistically insignificant increase, but the students would take advantage of only one lender to pay, and often for a long time to pay back.

With the consolidation of joint credit products, like say a combination of Stafford loans and Perkins loans, the resulting interest rates will always wind up somewhere in between. The weighted average will give you the interest, which are lower than your highest rated loans, but it will also be higher than your lowest loan products. So again the increase or decrease in interest rates will be negligible – the true advantage of loan consolidation is not necessarily in the lowering of interest rates, but actually reduce monthly payments and extending the term of the loan, so your student loan debt more administer and less likely to be in default.

Remember, the other advantage of consolidation loans is that there are no fees or costs associated with the consolidation, ever. If a service is charging any fees in advance for loan consolidation, they are probably a scam and should be avoided.

Student or parent may be the borrower for a consolidation loan, loans, parents can not be combined with student loan borrowers, loans only on the same can be consolidated. But of course, a parent borrower and their students can have their own separate loans.

Even loans that are in default but with satisfactory repayment arrangements may qualify for loan consolidation.

Consolidation loans for students as low as 4.5% of How to Pay Student loans

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