As of February 1, 1999, both FFEL and Direct Consolidation Loans have the same interest rate, which is a fixed rate set according to a formula established by law. The rate is the weighted average rate of the current rates charged on the loans being consolidated, rounded up to the nearest one-eighth of a percent. This means the rate you'll pay wont be more than one-eighth of a percent more than the effective rate on your individual loans. The rate is fixed for the life of the Consolidation Loan.
Before February 1, 1999, Consolidation Loans had variable interest rates. For information on interest rates for these loans, contact the Direct Loan Origination Centers Consolidation Department by calling 1-800-557-7392, if you have a Direct Consolidation Loan, or check with your lender if you have a FFEL Consolidation Loan.
If you have a Stafford Loan made on or after July 1, 1995, you can reduce your consolidation rate by up to half a percentage point or more if you can consolidate before the end of your grace period.
Being a student isnt an easy task, especially if you find yourself with two or three loans that need to be paid and you dont have the money. What can you do? Fortunately, our financial system offers a way out of this problem. Students can apply for a student loan debt consolidation, saving money and time.
Where Can I Get A Student Loan Debt Consolidation?
There are a lot of private entities that offer this service. You may make a simple query on your favorite search engine and you will find a lot of companies that can help you with it. Another option is to ask your college for any information regarding this subject. They should have related information and may be able to give you some advice.
What about the requirements? The first thing is that you need to be an American citizen or a US resident. The second thing to consider is that the minimum amount of money that you can borrow is USD10,000 and the maximum USD250,000; enough to pay for your undergraduate and your postgraduate education.
And what about families? A parent can also use this financial tool for educating his children. He may be able to consolidate the student loans of all his children into one, big loan and stop complicating himself with different payments and short term loans. Spouses can apply too.
What Are The Advantages And Disadvantages?
The main advantage of a student loan debt consolidation is that you can consolidate any kind of school loan: federal, medical, state, law, direct, among others; in general, any kind of private and public loan. And, the nicest thing is that, right now, the current interest rates are the lowest in the last few decades.
Another benefit of student loan debt consolidation is that the student will save time and money by concentrating all his loans into one. And, since the interest rate is fixed, he will know how much money he will need to pay for his studies. That way he can concentrate on his career and finish it as soon as possible, so he can start to earn money and pay the loan.
Finally, you wont have to pay any penalties in case you want to make pre-payments. And there are no application fees. That means that you wont have to use your little savings in applying for this benefit.
And what about the disadvantages? The main problem is that, although you will make lower monthly payments, you will prolong your debt to 10, 20 or 30 years, similar to a home mortgage. Take this fact into account when making your cash flow for the following decades. You need to be prepared.
There are millions of people out there who find themselves at the door of bankruptcy due to insurmountable credit card loans. It is easy to spend money with a credit card and you hardly realize when the card is maxed and you have to pay huge bills in order to keep the card active.
Many people who find themselves in this type of predicament, start paying their minimum required payments by using their second or third cards. However this juggling of finance soon catches up with them because the credit card loans come with huge interest payments attached to them.
Sooner or later as an outcome of the accumulating interest on the outstanding amount, the person will find himself/herself buried in debt. This is the time when the overwhelmed person will be forced to look for alternatives since the only other way is filing for bankruptcy.
The Credit Consolidation Loan Can be the Answer to Your Grief
Many people let their financial troubles spiral out of control before they take any action. This is the biggest and the most common mistake that indebted people commit. They do not seek help in time, but wait until the very last moment when they have absolutely no other way out.
If they would have sought to consolidate their debts at the first sign of financial distress, the terms and conditions would have been better. Nonetheless the credit consolidation loan can take care of the worst possible financial mess.
The credit consolidation loan can be negotiated to suit your condition best. Unfortunately the person who needs it very rarely asks for better terms because, first, they feel too relieved to find a way out from bankruptcy, and, second, they do not believe that they are eligible for any negotiation.
The negotiable terms are the installment amount (per month), the period of repayment (however, keep in mind that the longer the period the more you pay in interest), the rate of interest and the amount of loan for consolidation of debts. By negotiating these terms you will be able to arrive at the best possible solution for climbing out of the financial distress situation you find yourself in.
At no point in time should you think that you have no say in the matter. Even in the most hopeless situations, you will still have choices available, if you seek them. Be sure you do so when you apply for the credit consolidation loan.
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