Student loan consolidation means combining several student loans into one bigger loan from a single lender. They provide an opportunity for alternate repayment plans, making monthly payment more manageable. Consolidating loan can lower your payments but might affect your interest rate or benefit. What you actually doing is taking a new loan called federal direct consolidation loan. This would help you to combine loans into one at no cost to you. You need to know three things before doing consolidation. Various Student Loan Consolidation Options * What you owe: Borrowers need to understand the type of their loan. The National Student Loan Data System gives the information about the type of loan. * Loan benefits: Some loans carry benefits and others don't. For example Perkins loans have forgiveness option while PLUS loans don't. ss * Simplifying doesn't mean saving: Consolidation can lower your payment but not guarantees savings. There exist few options for consolidating student loans. First one is Graduated Repayment Plan. This is ideal for borrowers having a low initial income. Here monthly payment starts low and gradually increases every two year. Second one is Extended Repayment Plans. This is ideal for borrowers who are having more than $30,000 in eligible loans. Another option is the income based repayment. The monthly payments are usually created on family size and income and adjustments are done each year accordingly. This is ideal for those who seek reduction in monthly payment to make debt manageable. The pay as you earn or PAYE plan payment helps to attain lesser monthly payment amounts. This plan offers 10% discount per year. The Income contingent repayment plans are usually made for 25 years, and are analysed based on the gross income and the overall amount of loans present. Other option is Income sensitive repayment plan. This is ideal for borrowers seeking to make lower payment on FEEL loans.
started by sedeljak on 10 Sep 14
* What you owe: Borrowers need to understand the type of their loan. The National Student Loan Data System gives the information about the type of loan.
* Loan benefits: Some loans carry benefits and others don't. For example Perkins loans have forgiveness option while PLUS loans don't. ss
* Simplifying doesn't mean saving: Consolidation can lower your payment but not guarantees savings.
There exist few options for consolidating student loans. First one is Graduated Repayment Plan. This is ideal for borrowers having a low initial income. Here monthly payment starts low and gradually increases every two year. Second one is Extended Repayment Plans. This is ideal for borrowers who are having more than $30,000 in eligible loans. Another option is the income based repayment. The monthly payments are usually created on family size and income and adjustments are done each year accordingly. This is ideal for those who seek reduction in monthly payment to make debt manageable. The pay as you earn or PAYE plan payment helps to attain lesser monthly payment amounts. This plan offers 10% discount per year. The Income contingent repayment plans are usually made for 25 years, and are analysed based on the gross income and the overall amount of loans present. Other option is Income sensitive repayment plan. This is ideal for borrowers seeking to make lower payment on FEEL loans.