Category: Student Loans

November 15, 2020

My Experience With Federal Student Loan Consolidation

My college tuition was paid for in a combination of different ways, including savings, grants, scholarships and federal and private student loans.

A couple years back, as my college graduation date neared, I was terrified and lacking knowledge of what was in store for my college student loans. There were so many factors and options for paying back and consolidating and restructuring my student loans.

This article describes my personal experience with the process. I strongly encourage anyone considering or uneducated about restructuring and repaying college student loans to use the numerous resources out there.

Starting points in research can include the Federal Department of Education, your student loan lender and your college’s financial aid office.

My first experience with student loan reconsolidation was while I was still in school.

When I entered college in 2003, student loan interest rates were extremely low. It was decided that during the summer of 2005, interest rates on federal student loans would rise. I was unfamiliar with the concept of student loan consolidation as well as the process for loan consolidation.

I visited my college financial aid office that provided me with further resources as well as showed me a calculation of what the outcome would be if I were to reconsolidate. I chose to do so with the savings was $1,000 of the life of the loans if I chose to reconsolidate my federal loans at that point in time.

A few years later, with my college graduation date looming, I was once again unsure of my options and was very frightened of the whole process repayment and reconsolidation process. For the first year after graduation, I paid my federal and private student loans on the default repayment schedule.

The following year I read in the news and received mailings about an opportunity to consolidate before student loan interest rate changes. Before looking into my student loans, I decided to better understand my current situation.

student loan consolidationI placed all my student loan information from my file cabinet into an easy to view spreadsheet, complete with interest rates and lender contact information. I then researched what consolidation entailed in this instance.

Consolidation after July 1, 2009 was the right move for me. I completed an application online, which was easy to complete using the spreadsheet I had already compiled.

At that time I was also prompted to specify which repayment plan I wanted to sign up for, at which point I realized I had numerous more options that I had thought.

In addition to student loan consolidation making financial sense, it also made the process of repaying my student loans less complicated and stressful.

My loans and repayment schedules were rolled into one. I strongly advise every college student and graduate to research and learn about their college student loan repayment and consolidation options.

September 8, 2020

Why You Should Consolidate Your Student Loans

Is it your senior year of college?

While graduation may be just ahead of you, or you may have already graduated from college long ago and have already entered the workforce, there is one important thing that you should do: Consolidate your student loans.

Consolidating your student loans can save you time and money. Depending on where you went to college, and what you went to college for, you may have student loans that range anywhere from twenty grand to well over a hundred.

While you may initially believe that your student loans are just one payment that is not the case. There are several different types of student loans, and you may have one or more of each.

Subsidized Federal Stafford Loans are loans that have a special low interest rate because the government helps to pay for the interest while you are either in college, are in a grace period, or have taken a deferment.

Unsubsidized Stafford Loans are loans where the interest must be paid by the student or person whose name appears on the loan while classes are being taken. There is still usually a low interest rate on an Unsubsidized Stafford Loan.

Federal Plus Loans are loans that your parent may take out for you; however they are contingent upon their credit history and the amount needed.

While the interest is still low on a Federal Plus Loan, one will need to begin paying it back either two to three months after receiving the funds or after graduation.

Federal Perkins Loans are only granted to students that meet special financial circumstances. They will still have a low interest rate.

One of the drawbacks of a Federal Perkins Loan is that there is only a certain amount of money you will be able to qualify for. You must remain at least half time student or else the interest will begin.

When you graduate you may have several of the above types of loans, with varying amounts. It can be very confusing to have to pay several different bills in one month. By consolidating your student loans, you will only have to pay one bill a month.

Because you will often be able to pick the length of time, or term, of the loan, it may be possible to have a lower monthly payment when you consolidate your student loans – rather than paying several different bills that add up to a higher dollar amount.

While it is true that electing to pay your student loans over a greater period of time will result in a higher amount of money that you will pay total, there are some things you should take into consideration.

The first is that by consolidating your loans you will be paying less a month on your bills, freeing up capital to spend on other expenses. Second, your student loan interest is tax deductible off of your income.

Third, over time you will receive pay raises and be able to pay more towards the principal of your loan should you decide to. Finally, inflation will cause the amount you owe to become less. All of these factors are reasons you should consolidate your student loans.

When you consolidate your student loans, be sure to have them automatically deducted from your checking or savings account.

This will allow you to never miss a payment, so long as you keep sufficient funds in your account. By having auto debit you will never have to worry about having a late payment affect your credit score.