Student Loan Consolidation Hot Topics

More interesting findings this week - Student loan borrowers that take advantage of borrower benefit discounts should pay close attention to their repayment schedule to avoid loosing their discounts. Because so many lenders are struggling to stay in business right now, many of them are shortening or removing the late payment grace period. For example, some lenders offer discounts for on-time payments, and previously allowed borrowers to be up to 14 days late before removing the discount. This window is either shrinking or getting completely closed - being only 1 day late in some cases could cause discounts to be removed.

So make sure you stay on top of monthly payments and give yourself a few extra days, or even a week to get a payment delivered. If you have automatic checking account withdrawal setup, be sure to spot check your payments periodically. If you plan on setting up auto payment, note that it usually takes 1-3 billing cycles to get setup, so make your normal payments via check or debit card (over the phone or online) until you can confirm that the auto pay is setup. Also, if you switch banks or checking accounts, make sure and remember to switch your student loan payment(s) as well.

A little extra care and attention could help you save thousands.

Yes - it’s time. You’ve been thinking about this moment on and off since the beginning of summer. In between sipping cheap beer and having a well deserved good time, the thought of paying back your enormous student loan debt is now slowly solidifying into a general state of panic. Soon enough, the bills will start rolling into your mailbox. In between the magazine subscription requests and credit card offers, you’ll find those thick white envelopes packed full with your repayment coupons.

According to the Project on Student Debt, a nonprofit geared to help student borrowers, nearly 75% of borrowers graduating from a 4 year degree program have, on average, $19,000 in student loan debt. This amount does not take into consideration any graduate program debt.

One of the biggest hurdles for recent graduates is adapting to post college life - financially and socially. It’s a difficult time (albeit fun time) compounded by the need to find a good job, the possibility of moving to a new city, the cost of moving, general living expenses that were previously covered while in school, and of course student loan payments.

While many borrowers will be able to make due during this transitional period, either by consolidating or deferring their loans - some borrowers will not be able to pay, and eventually end up delinquent or even in default. Going into default can hurt credit even more then filing for bankruptcy for credit card debt. At a time when establishing good credit and building a sound financial foundation is critical, a mark like that on a credit report can have long term negative effects.

So…what to do now? The debt isn’t going anywhere, so you’ll you just have to get used to it and learn how to manage it.  That’s really the point I am trying to get across - manage your debt, don’t ignore it. There’s a reason why you get 30 consolidation offers in your mailbox each week - consolidation is a helpful tool that can really lower your monthly student loan payments. It’s not THE answer, but simply one of several tools that you can use in order to help free up some extra cash. The same holds true for deferment. While it doesn’t stop interest accrual on some of your loans, it does provide relief if you can’t make your monthly payments.

Stay tuned for more helpful information about dealing with post college life.

Now that summer is officially behind us and we are headed into the fall, I thought I would pull together a few cash saving tips to help “bulk up” your savings for the long winter ahead. Over the next few weeks, I will periodically post a variety of money savings tips and ideas that anyone can do to help line their pockets with some extra green.

Most financial advisors will say you need at least 6 months worth of living expenses in a savings account in case the unexpected should happen. I agree with this whole heartedly, but being a realist, fully understand that this is not an easy task. Here are a few starter tips to help achieve that 6 month savings umbrella your parents have been nagging you about since you graduated.

• Sell what you don’t need. You have plenty of CD’s, DVD’s, and old play station games laying around that you haven’t touched in years. Extra MP3 player? Digital camera? Left over CRT monitor? Sell it all - someone will buy it. You started that ebay account for a reason - get to it. Also, instead of buying brand new furniture, buy used. All you need is a can of paint and you can turn that faded oak coffee table into a fresh nouveau masterpiece.
• Keep a spending journal. Write down your daily expenses - big or small.  At the end of the month categorize them -  You’ll be shocked at what you spend the majority of your cash on.
• Build a budget and stick with it. Probably one of the biggest ways to save money is the monthly budget - do it right and you can start saving for that trip to Costa Rica.
• Consolidate your student loans. You knew it was coming… Consolidation is the easiest way to cut your monthly expenses nearly in half.

Stay tuned for more tips in the weeks to come.

The other day I spoke to a lovely woman who has been teaching for a few years in a low income area. While teaching, she went back to school to get her Masters degree to help raise her salary and keep her credentials. After a few years of teaching in a low income area she made a salary of $32,000. Her student loans equaled $50,000.

My suggestion to help manage her student loan debt was to consolidate her federal student loans. I explained to her that if she did not consolidate her monthly payment for her student loans would be about $570 a month for 10 years. It’s obvious that a monthly payment this high is just not possible to manage on a teacher’s salary. By consolidating it would stretch her repayment term to 25 years however there are no early repayment penalties. Her monthly payment once consolidated could be as low $276 a month.

With all of her big plans and obligations like rent, utilities, car payments, and beginning savings, she won’t have to worry about how to make her loan payments once she consolidates. No she is free to pursue her dreams without a dark cloud hanging over her head.

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
Add me as your friend!

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

With graduation time right around the corner, we’ve had a lot of customers call in asking when to consolidate their federal student loans.
First of all, federal guidelines stipulate that you can not consolidate you loans while enrolled in school more then half time. However, that doesn’t mean you have to wait until you graduate to start the process. We recommend getting in touch with a consolidation lender before you graduate. This will afford you the time to get some of your questions answered, a quote for your lower monthly payment, and information about borrower benefits. While the application can not be signed and dated until AFTER you graduate, it doesn’t hurt to do your homework and get prepared now, ahead of time. What’s the rush you ask? Interest rates are expected to increase again on July 1, 2007 - so having your application signed and submitted after you graduate and before the rate increase will most likely be a tight squeeze. Additionally, because of the influx of student loan borrowers submitting applications this spring, processing times will be inevitably delayed.
As an added benefit, if you consolidate your loans during your grace period (6 month none payment period post graduation) you can lock in your interest rate .6% lower then if you wait until your loans go into repayment. Doing so does not require that you start making payments right away. Upon applying, you can request to have your application held for your grace period end date. Your application will have been signed and submitted long before your grace period ends, but your new consolidation lender will not start billing you until that date is reached.
Stay tuned over the next few weeks for more helpful information about the interest rate change this coming July. As always, your comments and suggestions are appreciated.

I was chatting with a friend this past evening, and the topic of grad school came up. (As it tends to at my current age) We both agreed that grad school was a great idea - a somewhat necessary tool to advance in ones career. I’ve been rather excited about the prospect of going back to school for some time now, but my friend had some hesitation in his voice. Not because of the application process, or getting back into the swing of class life - but more so over the issue of payment. How do you pay for the normally pricey grad school courses?

Many students still have remaining debt from their undergraduate program, and the thought of taking out more student loans can be rather daunting. But fear not, there are options available and steps that can be taken to help mitigate some of the impact.

First and foremost, if you haven’t already, consolidate your federal student loans from your undergrad program. This will lock in your interest rate, and provide greater monthly savings - more cash flow available for normal living expenses. Not to mention, that you can defer your consolidation while you are attending grad school.

Next, if you have any private student loan debt - consolidate that as well. Wait until after you have completed your federal student loan consolidation - as it will help your credit, and private student loan consolidation is a credit based program.

Consolidating your existing debt will help you become more financially stable - now you can focus on generating money to pay for grad school. Scholarships and fellowships are a great place to get some additional help for funding. If you need additional funds, there are a variety of low interest graduate school loans that can help pay for your courses. These include the Graduate Stafford loan, Private alternative loan, and the Graduate PLUS loan.

The reality is, that most people will have to utilize some sort of additional student funding for grad school. The important thing to remember is to take advantage of the many different, helpful options available on the market, and try to get financially stable right from the start.

Stay tuned for some quick post graduate budgeting tips…

StudentLoanConsolidator.com
StudentATM.com
StudentLoanNetwork.com
Gradloans.com
ActEducationLoans.com
FinancialAidPodcast.com

Finally, the drinking is done and hopefully the hangover has worn off. It’s decision time. How do you plan to overhaul your life in 2007? Will you change the way you work or what you do in your free time? How much you spend or will you start to save? Or have you made any vows of a more offbeat nature?

2007 for me is the year to:

Manage my debt

Save money for my Barbie townhouse

Stick to one hair color

Gain new job responsibilities

To post your New Year’s Resolution’s click here

Happy New Year everyone!