Student Loan Consolidation Hot Topics

That’s right - you can’t hide from it anymore. If you graduated this past spring, the chances are your grace period is over and you have to start paying back your student loans. This is not the end of the world for you, just the beginning of a long relationship with your loan servicer. (Technically, the relationship started 4 years ago…but who’s counting)

You have some options. First and foremost, examine your monthly budget, and include your new student loan payments. If you can afford to make the payments, don’t defer or put your loans into forbearance just to save money. When you put your loans into forbearance or deferment, interest will continue to collect on your none-subsidized federal loans, which gets capitalized once you go back into repayment. This basically means that your total payback amount will increase. Not to mention, deferment and forbearance are intended to be used during financial hardships. If you use them up now when you can afford to pay, you won’t have them in the future when you may actually need them.

Still, you can afford the monthly payments, but now you have much less cash lying around. Consider consolidation - you can cut your monthly payment nearly in half. And, there is no penalty for extra or early repayment. So, when you claw your way to the top of the corporate ladder, and land that high paying fluff job, you can payback your remaining loan balance without being penalized.

Finally, don’t forget to consolidate your private student loans. They’re probably going into repayment right about now as well. And if you have a lot of private student loans like me, then consolidating those will also help that monthly budget stay fit. Just like federal consolidation, private consolidation will combine all of your private student debt and lower your monthly payment, without any penalties for extra or early repayment.

A common misconception with student loan consolidation is that lenders charge some sort of fee if you consolidate your loans with their company. There are NO fees to apply or receive a Federal Consolidation Loan. This is because federal regulations do not permit lenders to charge borrowers a fee. It costs you nothing to set this up AND there is no credit check. Students with bad credit or no credit can apply. You do not have to give any guarantee of income.

Applying for student loan consolidation is a fairly straightforward process. The borrower is required to fill out an application form. The eligibility specifications are the following:

Borrower must have over $10,000 is federal student loans.
The borrower must be out of school or under half time.
Loans must not be already consolidated.
You can not be in a default status on your student loans.

Once an application has been accepted, a statement containing all the important information such as payment plan, payment schedules, etc. is sent. To learn more or apply, contact a Student Loan Network Counselor toll-free at 877-328-1565 or apply online.

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

Student Loan Network

Many people consolidate to get the lowest monthly payment possible for their federal student loans. The reason why consolidation gives you a lower monthly payment is because it extends the term of the loan. The chart below shows the maximum repayment term you are eligible for. The term is based on the total of all your student loans.

Now keep in mind that there are no penalties for early repayment, so by making larger payments you may pay off your loan sooner. This is because all additional payments go direct to your principal. Use our calculator to try different repayment scenarios before choosing to consolidate.

Hopefully this blog helps you decide if consolidation is something you could benefit from!

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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The Student Loan Network offers four ways to repay your student loan debt. Each one fits a slightly different financial situation, so you need to think seriously about what you can afford when you pick a repayment plan. It is our job at the Student Loan Network to ease your nerves as well as your pocketbook when thinking about making those student loan payments. Listed below are the details on the following plans that are available once you consolidate your loans through the Student Loan Network.

The Standard Repayment Plan is when the borrower pays the same amount each month for the life of the loan. This is your best option for paying the least amount of interest back. Your loans are initially set up for a Level Repayment Plan. It is recommended that you continue with the Level Repayment Plan if you’re able to make your monthly payments. Again, this is because it is the lease expensive plan in the long run.

Another Repayment Plan is a Graduated Plan. The Graduate Plan offers a lower, more affordable monthly payment in the early months of repayment and higher payments later in the repayment term. Your loan is repaid in the same time frame as the Standard Plan. It is the total interest costs that are slightly higher than the Standard Repayment plan.

The Income Sensitive Plan is when the monthly payment amount is adjusted annually, based on the borrowers expected total monthly gross income from employment and other sources during the course of repayment. This is the most flexible plan, but it can be the most expensive in the long run, and you must reapply annually.

There may be times when you have some difficulty making your monthly loan payments. If you find yourself in this situation, you may be eligible for a student loan deferment or student loan forbearance. Deferments and forbearances are for those times when you run into short-term financial difficulties. For more information on this please contact your lender or the Student Loan Network.

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

For those of you who graduated this past spring, in a few weeks your federal student lender is going to contact you with your repayment schedule. This will mark the end of your 6 month no-payment grace period. Welcome to repayment. Now, if you haven’t consolidated your loans yet, please get in touch with us right away. I can’t stress this more - if you consolidate your loans within your grace period, you can still lock in the lower grace interest rate of 6.54%. Additionally, consolidation reduces your monthly payment up to 60%, so take whatever you currently have to pay per month, and chop that by 60%. If you have 20k in loans, your payment before consolidation would be around $227 - after you consolidate, $150.

Give our loan counselors a call at 877.328.1565 and ask them how much you can save - they’ll provide a quote for you in minutes. Or you can start an application and even eSign by visiting studentloanconsolidator.com.

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

Shopping for a consolidation can be a difficult and confusing event. While many companies offer various cash saving borrower discounts, very few explain how they actually work. In simple terms, discounts remove time off your loan. Your monthly payments will not go up or down, but the overall time you pay is shortened. For loans over $20,000, if you take advantage of both discounts, on average you will save:

• Almost 3 years on a 20 year loan
• Almost 4 years on a 25 year loan
• Almost 5 years on a 30 year loan

The 0.25% automatic debit discount is permanent as long as you continue to use the program.

The 1% discount for the first 36 consecutive on time payments is effective after 36 months. What it all boils down to in the end is money saved. By shortening your repayment term, you save cash. Call and ask one of our loan counselors how much you can save each month/year/overall at 877.328.1565 or visit StudentLoanConsolidator.com.

StudentLoanConsolidator.com StudentATM.com ActEducationLoans.com Gradloans.com