Federal student Loan Consolidation
Federal loan consolidation provides an individual the opportunity to
consolidate all outstanding loans held by various lenders into a single
new loan that can be recovered in single monthly payments. This loan
also helps a person to extend the repayment period thereby making
monthly payment obligation more manageable. It improves your credit
situation by showing that you are taking steps to improve yourself.
Federal loan consolidation brings in a positive payment history thereby
improving your credit score. The loans that can be included in a federal
consolidation process are the Stafford loans, subsidized and
unsubsidized (also called guaranteed student loans), Perkins loans, PLUS
Loans, federal insured student loans, supplemental loans for students,
health education assistance loans (HEAL), nursing student loans (NSL,
and health professions student loans.
There are certain benefits in consolidating a loan. It reduces the
monthly payment up to 60%. Federal consolidation allows borrowers to
lock in current low rates thus protecting from future rate increases.
Other benefits include an improvement in credit rating.
There are many loan counselors available to assist you with the
application process when you are applying for a federal loan
consolidation. The three easy ways to apply are online, phone or mail.
The consolidation process takes anywhere from 30 to 90 days.
Even though the federal loan consolidation releases a customer from a
burdensome situation, especially when the borrowed amount is large,
there are certain disadvantages of consolidating your loans. On account
of longer repayment periods, the individual will have to pay more by way
of interest.
Education is today's biggest requirement besides food and employment
for sustaining a decent life. In order to facilitate the employment and
shelter needs, it is necessary to be equipped with the power of
knowledge. To fulfill the needs of various students who find it
difficult to pursue their education program, the US government has come
out with the idea of providing students with a consolidated loan named
as "federal government student loan consolidation," which is a combined
form of the various loans taken, by a student.
A program that the US government has launched is the Federal government
student loan consolidation program that enables students in continuing
their graduation and higher study program. With the help of the
consolidated loan where the interest rate is nominal as it is meant for
the benefit of the students community where parents and guardians cannot
invest huge amounts in the education of their wards.
This federal government student loan consolidation can be repaid in easy
installments when the student completes his education and is in a
position to earn and pay. This saves the student from repaying different
lenders at different points in time with different interest rates. The
time period chosen by the student for the repayment of the loan can vary
from 10 to 30 years. However, the longer the time period you choose, the
greater the amount you pay.
Some of the features of Federal government student loan consolidation
are:
This loan does not require hefty loan processing fee, and the payments
can be made in flexible schedules. The interest rate is a fixed amount,
which is the average of the total interest rates of different loans,
which is rounded off to the 1/8th of the percentage. Any student who has
a history of bad loan payment is still eligible for the consolidated
federal loan. There is no minimum loan amount limit.
Thus, this is a premium policy of the federal government student loan
consolidation program, which is indeed a student friendly move.