| Earning a college degree is one of the most | | | | Parents with more than a minimum amount in |
| important - and expensive - things you will | | | | PLUS loan debt are also eligible to |
| do in your life. If you are able to attend | | | | consolidate. |
| college without having to take out any | | | | |
| student loans, you are one of the lucky few. | | | | If an individual chooses to consolidate his |
| Most individuals have to borrow at least some | | | | or her federal student loans, the loans can |
| of the money they need for tuition, books, | | | | be consolidated through a private lender, and |
| and living expenses. And upon graduation, you | | | | the borrower can only consolidate again |
| are faced with the challenge of repaying all | | | | through the U.S. Department of Education. |
| of those loans after the grace period ends, | | | | Upon consolidation, the loan is charged a |
| whether you are employed or not. That can be | | | | fixed interest rate that does not change even |
| a hard dose of reality when you realize that | | | | if the loan is reconsolidated. And, with a |
| not paying your loan payments on time, or not | | | | federal student loan consolidation program, |
| paying them at all can have grave | | | | there are no fees applied or closing costs to |
| consequences where your credit rating is | | | | be paid. This differs from private lender |
| concerned. That is why it is smart to | | | | debt consolidation. |
| consider a federal student loan consolidation | | | | |
| program. | | | | Taking advantage of a federal student loan |
| | | | consolidation program can be beneficial to |
| Loan consolidation entails taking out a | | | | your credit history, by helping it stay |
| single loan in order to pay off several | | | | clean. It is easier to keep track of and |
| others. This is done for convenience, as you | | | | remit 1 monthly loan payment than to keep |
| can often get a lower interest rate, and you | | | | track of 2 or more student loan debts, |
| only have 1 monthly loan payment to keep | | | | especially if you move frequently. And losing |
| track of. It is also good for your credit | | | | track of a federal loan is never a good idea. |
| history. Often, student loans are guaranteed | | | | |
| by the United States government. With a | | | | Loan consolidation is especially good if you |
| federal student loan consolidation program, | | | | are having trouble making all of your |
| currently held loans are purchased and closed | | | | scheduled loan payments on time. Defaulting |
| either by a loan consolidation company or by | | | | on your student loans is a very unfortunate |
| the U.S. government. Who handles the loans | | | | situation to be in, and can lead to having |
| depends upon what type of federal loans the | | | | property and possessions taken from you in |
| borrower has. | | | | order to pay the debt. You can also consider |
| | | | requesting loan forbearance from your lender, |
| The interest rates for Federal student loan | | | | which allows you to take a break from your |
| consolidation programs are very reasonable. | | | | payments, or make interest-only payments. |
| They are lower than your average bank loan. | | | | However, the longer you wait to pay your |
| They are calculated based on the current | | | | debt, the longer it will be hanging over your |
| year's student loan interest rate, and in | | | | head. With consolidation, repayment is |
| turn calculated based on the 91-day Treasury | | | | extended over a longer period of time which, |
| bill (a government bond used as a | | | | in addition to the single lower interest rate |
| debt-financing vehicle of the U.S. Federal | | | | you will have on your loan, they payment are |
| government) rate at the previous auction | | | | lower and more manageable within your budget. |
| (held every year in may) of the year. The | | | | |
| interest of student loans are variable, but | | | | If you are interested in a student loan |
| can not go over the maximum of 8.25% for | | | | consolidation program, you can consult the |
| Stafford Loans and 9% for PLUS loans (Federal | | | | U.S. Department of Education, or one of the |
| parent loans). | | | | lenders with whom you currently have a |
| | | | student loan for information. During the |
| Student loan consolidation programs are | | | | application process, you can learn exactly |
| available to former students who have more | | | | which of your loans qualify for consolidation |
| than a minimum amount of federal student loan | | | | (hopefully they all do!), and be on your way |
| debt (usually more than about $10,000). | | | | to more manageable student loan payments. |