The Advantages of Federal Student Loan Consolidation

Kamis, 26 Desember 2013

By Steve Johnson (p)
If you've been wondering lately "What is loan consolidation?" then you are in luck, because education loans are about to get a whole lot easier to pay off.
President Obama student loan proposals are now impacting college debt consolidation and federal loan repayment for millions of college graduates.
However, while the advantages of federal student loan consolidation are plentiful, so are the pitfalls. It is important for federal student aid borrowers to understand the risks and rewards when they need to consolidate their educational loan.
Advantage #1 - You will save time and money. No fees, simple paperwork process. No refinancing decisions based on your credit rating. The new program is reportedly available only from Jan. 2012 through June 2012 will also be offering a slight deduction for selecting the automatic debit option in repaying your loan. This not only helps you make timely payments, but it also helps reduce the amount of interest you'll be charged over the life of your federal direct loan.
Advantage #2 - You may improve your credit score by avoiding default. Consolidating education loan debt could be the ticket to staying current and not defaulting on your financial obligations. These types of loans cannot currently be discharged for dismissed (except for loan forgiveness programs); not bankruptcy, not by hope and prayer. Not by ignoring the threatening collection agent letters. These loans must be repaid! So by consolidating, getting a smaller monthly loan payment, and sticking to a repayment schedule consistently, over time you will pay off your debt. Federal student loan consolidation then gives you a path to resolving your financial problems related to college debt.
Advantage #3 - You will avoid frustration by only having one bill to pay each month. Having to keep track of 2 or 3 different bills each and every month can seem daunting; so, by consolidating into a new federal loan consolidation program, you will not only lower your monthly bills. You'll also lower the number of checks you will have to write and mail each month!
College was worth the price of admission. Your college degree opens many new doors to career advancement now and in the future. But now, repayment of those college loans looms large. And the new federal student loan consolidation program available for only six months by the U.S. Department of Education (Jan. 2012 - June 2012), could be the winning ticket to taking advantage of direct loan consolidation.
There are also disadvantages lurking around the edges of the new federal and private student loan consolidation programs: Some consolidation programs make you ineligible to get your loans forgiven if you later enter a qualifying career. Some federal loan consolidation programs exempt certain types of loans, and loans that were taken out at an earlier time period. Oftentimes, old loans carry a lower interest rate, so consolidating those at a higher level of interest makes no sense. Remember to compare options; your student loan consolidation rates should at the very least be better than you can get from a private federal loan consolidation program.
But the U.S. Government's Dept. of Education website now offers a variety of loan calculators aimed at helping college graduates have access to online tools aiming to help them compare loan consolidation packages and help them determine the best way for them to pay off college expenses.
The official ed.gov website is undergoing a number of updates after President Obama's student loan forgiveness plans came to light in the media. By providing comprehensive details on various ways to finance a college education, this website will ultimately offer yet another advantage to those seeking federal student loan consolidation.
While paying off these loans may never be easy, making the sacrifice and the commitment now to honor your loan commitments will pay off in other ways: You will earn the satisfaction of having followed through with one of your major financial commitments you made early in your adult life. And, you will demonstrate to yourself and to future creditors that you are an excellent credit risk.
Therefore, the advantages of federal student loan consolidation are obviously a goal you'll want to consider as you dig yourself out of debt.