Student loan consolidation law
Nowadays, there are a number of loans available for students. The primary classification is-federal student loans and private loans. The loans federally funded are initially administered through US Department of Educations Federal Student Aid programs. Student Loan Consolidation services can be easily obtained for federal student loans. The federal programs spend about $60 billion/year in work-study support, grants, and loans. One of the most sought after forms of federal student loans is The Stafford Loan. There are other varieties as well. ROTC/military loans make payments for college expenses. Private Student loans are granted by Standard Lending Institutions. The most widespread among them are Sallie Mae Signature and the Citibank student loans. These loans fall in the category of unsecured loans. In some cases, secured loans are also offered. They have the drawback of repaying the money at a higher rate of interest.
A combination of these two loans can be used effectively to finance the education. Anyhow, the issue of student loan consolidation it should not be mixed up with financing ones education. The federal loans should be consolidated first, followed by private student loan debt. The advantages of consolidation of federal loans are inclusive of lower rates of interest (they change every year on 1 July), extending the period of loan repayment to thirty years which would result into reduction of monthly costs, and reduction of no. of Lending Institutions to which checks need to be sent every month.
How to consolidate student loans
Eligibility for federal student loan consolidation
Some criteria have to be met to be eligible for consolidation of federal student loan. The student should be enrolled for less than a half time in the school, i.e. he/she should not be a full-timer. Secondly, the student must be an active re payer of the loan, i.e. he/she should be in grace period of loan. Most of the companies dealing with consolidation demand a minimum loan amount. The typical amount is $10,000.
Difference between private student and federal loans
Federal Student loans have an edge over private loans. For instance, the loan interest is tax deductable. It is possible to forgive the loan at times owing to some kinds of service, & the payments on federal loan can be at times deferred, if the student happens to get back to the school. Private loans do not possess any of these advantages- they are just usual, unsecured or secured loans, and need to be paid back like other loans. Hence, its imperative to go for a separate consolidation of private and federal loans ; that to, consolidation of federal loans should be carried out first. If the student commits the mistake of mixing both the loans, he/she would need to get a single private loan thereby losing all the advantages of federal loans.
Government student Loan Consolidation
The eligibility criteria consist of the student having more than one federal student loan. If the number of loan is one, consolidation is not required. The repayment amount is very small, and can be extended at times.