Student Loan Consolidation Hot Topics

According to the results of the United States 91-day Treasury Bill auction, the interest rate for Stafford loans originated before July1, 2006 increased by 8 basis points. Loans in repayment will change from 7.14 to 7.22 percent. For Stafford loans in an in-school or grace, the rate will change from 6.54 to 6.62 percent. Additionally, interest rates on PLUS loans will increase from 7.94 to 8.02 percent.

For the graduates and parents who have older, variable-rate loans can take advantage of the lower rate if they apply for student loan consolidation by June 30. Also, for spring 2007 college graduates who still have variable-rate loans should apply for consolidation before their six-month grace period comes to an end. By applying in-grace, they can lock in a rate of 6.625 percent, compared to 7.25 percent if they wait until repayment begins this fall.

Also, students and parents who consolidate their Stafford, PLUS using a Student Loan Network Consolidation Loan can also reduce their interest rate by making on time payments and by using automatic debit to make payments electronically. For more details please phone us at 877-328-1565 or visit here.

The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans

The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans

Student Loan Network

You have come to the right blog today if you are just trying to have some basic questions answered on federal loan consolidation. Here are some commonly asked questions I receive at the Student Loan Network about loan consolidation. Enjoy!

Can I consolidate jointly with my spouse?

No, Effective July, 1 2006 a married couple may no longer obtain a Federal Consolidation Loan as joint borrowers. Why not you ask? When married students consolidated their loans together, each spouse became responsible for the full amount of the loan, and the loans could not be separated if the couple got divorced. To avoid such problems, Congress decided to repeal this provision as part of the Higher Education Reconciliation Act of 2005.

My lender told me I have to consolidate with them. Is this true?

Students and parents can consolidate their loans with any lender, even if all of their loans are with a one lender. (The single holder rule was repealed on June 15, 2006, as part of the Emergency Supplemental Appropriations Act of 2006.) This allows you to shop around for a lender that offers a lower rate or better discounts.

How much does federal loan consolidation cost?

There is no application or processing fee for consolidation. Also, no credit or income verification is needed.

What if I forgot to consolidate one of eligible student loans?

You can only add a forgotten eligible student loan to your new consolidation loan if you add it within 180 days of the loan consolidation. If you are within the 180-day period, this won’t require a new consolidation loan.

The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans

Student Loan Network

It is about the time of year when recent graduates are wondering whether or not to consolidate their Federal student loans. It is a big decision for multiple reasons. It is not only a long term finance plan, but it is not a reversible decision either. People call in every day asking if they can reconsolidate their Federal Student Loans. The answer to this is simple; if you have new Stafford loans to add in to the consolidation, then you can combine your previously consolidated loan with your current Stafford loan(s). However, this is in no way changing the rate of your previously consolidated loan. The way that the rate is determined is through a weighted average. So for example:

You consolidated some loans in 2002:

$23,000 fixed in at 3.5%

You went back to school and took out:

$18,500 Stafford loan at a fixed rate of 6.8% (this rate is set by the Feds, and can change every July 1st)

$10,000 grad plus loan fixed at 8.5% (this rate is set by the Feds, and can change every July 1st)

You are now thinking about consolidating these all together:

• $23,000 @ 3.5%
• $18,500@ 6.8%
• $10,000@ 8.5%

Your rate is formed by taking the weighted average of your loans:

Step 1: 23,000 x 0.035 = 805

18,500 x 0.068 = 1258

10,000 x 0.085 = 850

Step 2: 805 + 1258 + 850 = 2913

Step 3: 23,000 + 18,500 + 10,000 = 51,500

Step 4: (2913 / 51,500) * 100 = 5.656

Step 5: round to the nearest 1/8^th = 5.75%

So because you have a portion of your loans at a lower rate, and a portion at a higher rate, the interest rate is weighted on those portions. Under no circumstances can you reconsolidate a federal loan that is already consolidated. That amount of loans will be at that interest rate for the life of the loan. So, now we know how the rate is determined - should you consolidate your loans? The example above does not take into account that most student’s Stafford loans are at a variable interest rate that is reset every July 1^st. So for someone that has a Stafford loan that was disbursed Jan 2006 and this person just graduated, their rate is 6.54%…this rate, if not locked in by consolidating, will change July 1^st. It could be higher, and it could be lower. Here is a list of pros and cons for Federal Loan Consolidation. As with any financial decision, every situation is different, so it is always smart to relate this information to your specific loan portfolio.

Based on this list, the people who choose to consolidate are usually the people who cannot afford to pay their minimum monthly balance. The average college graduate graduates with about 20,000 in loans - .this is a payment of about $231/month; so the biggest aspect to consider is can you see yourself making a payment of $231/month for 10 years? Or would it make your life easier now to consolidate, pay $154/month, with the hopes of paying down the principal in the future, so you are not taking the allotted 20 years to pay it off. In my personal and professional opinion, if you aren’t rolling in the dough - it makes sense to consolidate now because you can always pay more in the future - when you have it.

Helpful Sites

Student Loan Network
Private loan Consolidation
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With tuition rising, many students and families need to take out private student loans in addition to federal student loans. Once the student graduates they are usually in shock when they find out how much their monthly payment is. The private loan that was once a friend and allowed them to attend college now becomes their enemy because they feel they will be in debt for years.

To help ease the burden of repayment on private student loans the Student Loan Network now offers a private loan consolidation program. It will reset the term of the loan and help reduce the monthly payment. Also, you will receive one bill each month once the loan is consolidated. This is a huge benefit for students who are being billed by multiple lenders.
If you’ve got questions about interest rates, incentive programs, or the general process of student loan refinancing, contact Student Loan Network by phone at 866-532-7661 or click here.

The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans

Are you looking for payment relief on your federal student loans? If so then loan consolidation is the answer to improving your financial situation. The best feature of loan consolidation is that it is not a temporary fix to improve your finances. Consolidation gives you long term relief from high monthly payments! Please see below:

$20k Loan Before Loan Consolidation
*Payments based on a 10 year repayment schedule
Monthly Payment = $228.37

$20k Loan After Loan Consolidation
*Payments based on a 20 year repayment schedule
Monthly Payment = $150.59

As you can see, consolidation does give you a longer repayment plan however you can pay off the consolidation loan at any time and there is no early repayment penalties. It’s a great solution to help free up extra cash for other expenses such as rent, food and car expenses, and credit card payments. Its obvious folks that federal loan consolidation is an excellent debt management tool. Check it out!
The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans