Managing various federal student loan payments is a tiring and daunting task to many people. This is due to the reason that they are managed with multiple servicers and multiple interest rates. This issue is finally resolved by the introduction of student loan consolidation.
The education department in the United States permits students in choosing the best consolidation servicer under a specific loan program. The question is, “is Consolidation right for you?”
Student loan consolidation is an effective solution for the majority of borrowers. This helped them in managing their loan effectively. The concept is on one loan, one monthly payment, one fixed interest rate and one loan servicer. These are all contained in a student loan consolidation without paying for consolidating fees.
There are many benefits that can be obtained from a student loan consolidation. This is also the reason why many parents are opting for this loan. One of the benefits that can be obtained from a student loan consolidation is that there is an opportunity of choosing from various repayment plans. They have their different terms that permit you to pay the consolidation loan.
The repayment loans include pay as you earn income-based repayment, income-contingent repayment and many more. These repayment plans provide lower payments and flexibility based on the family size and income. Apart from it, there is an opportunity of changing plans at any time that you want. This still depends on the eligibility requirements.
Using the online calculator for the consolidation loans is a must. This is needed in estimating the monthly payment under the different repayment options. Another benefit from using student consolidation loan is the grace period. It can be consolidated provided that the application is noted before the grace period ends. Or else, the consolidation application is processed immediately. There is also a chance of losing the grace period.
Taking care of the past due loans is also possible after applying for the consolidation. Apart from it, there is an eligibility for the temporary forbearance This is responsible in bringing the qualifying past loans current.
Student loan consolidation is right for you because of the opportunity for public serve loan forgiveness eligibility. It is good to remember that consolidation loan is eligible for the loan forgiveness. As long as the program requirements are met, they can further be maintained.
In order that these benefits are obtained from a student loan consolidation, there are a few of the important things to consider. It is a must paying the different interest rates and the long term rates. This is required by most financial institutions and banks that offer this loan. Even the grace period is a technical term that must be completely understood. So far, this is understandable provided that you talk to the staff of the bank.
On the other hand, the direct parent plus loans are also not allowed to be mixed with consolidation loan. This is regarding the “income-based repayment plans” or “pay as you earn plans”. Thus, this must also be remembered importantly. In addition to the process of consolidating, there are instances that there is a loss of certain benefits from federal student loan.
In being eligible for the student loan consolidation, there are certain requirements that must be met. First, there is a need to have a single federal loan under the FFEL or Direct loan programs. There is also a need to have loans in repayment or grace that include the forbearance, deferment and delinquent status. However, it is important to remember the loans cannot be consolidated if you’re still in the school.
But, the loan can be still be consolidated if it is in its default. There is only a need to agree paying the new direct consolidation loan. This loan may be under the income-based repayment plan like Income-Contingent Repayment, Income-Based Repayment, and “Pay as You Earn”. Setting up satisfactory repayment arrangements is essential with the specific loan holder.
To prove that the student loan consolidation is the best thing to consider, there is no need to pay for application fees. These fees are normally required in consolidating the federal education loans. Contacting someone that offers you the service of consolidating the loans for fee is not advised. This only means that they are not reputable consolidation servicers.
Consolidating the loans is a must and is considered to be the right option. This is more on simplifying the loan repayment by means of centralizing the loans to a single bill. The monthly payments are lowered by thirty years as part of the loan repayment. There is also an opportunity to have a complete access to the various repayment plans, as discussed above.
The opportunity of switching from fixed interest rates to variable interest rates is also achievable. But, increasing the duration for the repayment period means more interest and payments for your part. The present monthly payments must be compared with the consolidated monthly loan payments.
Before consolidating the loan, it is a must considering the lost from the borrower benefits. The original loans presented the borrower benefits, interest rate discounts, loan cancellation benefits. But, these may all be cancelled right from the decision of consolidating the loan.
Lowering the amount of monthly payment is possible through consolidation by first evaluating the income situation and budget. As mentioned, there are forbearance or deferment options that provide you relief in the short-term. On the other hand, student loan consolidation means that there are no other ways that the loan is removed. The loans consolidated were already paid off. Apart from it, they do not anymore exist.
Student loan consolidation has its strong and poor points. Thus, it matters analyzing it first for your utmost benefit. The decision is still yours in simplifying the payments. This also results in the elimination of a few of the benefits. Learning more about it is essential in weighing the cons and pros.
Student loan consolidation is right for you because its advantages far more outweigh its disadvantages. This also helps you in the long run!