If student Loan debt is a heavy monthly burden on you or your family, you alone. And if the monthly payment is becoming so unmanageable that you may have already missed payments or be in danger of default, then loan consolidation may be right for you.
A consolidation loan is just what it sounds like. With a loan consolidation program your high interest student loans are combined lower interest loan, with one lower monthly payment, that you need to make to only one
Consolidation Loans are much like the same idea of refinancing a mortgage, or taking a home equity consolidate credit card debt or pay off other high interest loans. Just about every kind of Federal Student Loan qualifies for loan consolidation including; FFELP, FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student loans. In some instances loan consolidation is even available for private education loans as well. Loan consolidation is offered for student loans for either graduate or undergraduate schools.
Interest rates on consolidated student loans are calculated by taking a weighted average of the loans being consolidated, and are then rounded up to the nearest 1/8 of a percent. The new interest rate cannot exceed 8.25%.
So for example let's say that a student has a couple of Stafford Loans that were originated on or after July of 2006. The fixed on these loans would be 6.8%. If only these loans are consolidated the new resulting interest be 6.875%, a statistically insignificant increase, but the student would gain the advantages of only having single lender, and often gets extended time for pay back.
May 19th, 2010
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