Life can be complicated for any borrower who is paying on multiple student debts. Bearing a number of student loans at varied interest rates and different payment due dates can be difficult to manage.
Working with a student loan relief consultant can ease the worries of debtors to a great extent. Experts say that loan consolidation is a very viable solution in this tough economic situation to help borrowers pay off their student loans smoothly.
Types of student loans that may be consolidated
- Direct subsidized or Unsubsidized Loans
- Subsidized or unsubsidized Federal Stafford Loans
- PLUS loans from the Federal Family Education Loan (FFEL) Program
- Direct PLUS loans
- Supplementary loans for students (SLS)
- Federal Nursing/ Perkins Loans
- Loans for Health Education Assistance
A few existing consolidation loans
One can always consult a student loan relief consultant to know more about this. Usually, borrowers are eligible to consolidate their loans once they complete graduation, leave school, or drop school below half-time enrollment. Borrowers paying varied interest rates for all their federal student loans can consolidate them and make a single monthly payment. By doing so, they can have just one fixed interest rate that will remain unchanged during their loan repayment period. This fixed rate of interest is calculated on the basis of the weighted average of the interest rates of the loans being consolidated.
Requirements for loan consolidation
- Borrowers must have a minimum of one Direct Loan FFEL Program Loan in repayment or grace period.
- To consolidate a loan in default, one needs to make suitable arrangements for repayment with the current lender before consolidation, or the borrower must agree to repay the new Direct Consolidation Loan. They can repay the loan through the Income Based Repayment Plan, Income Contingent Repayment Plan, Standard Repayment Plan, or Graduated Repayment Plan.
- Under certain conditions, borrowers may consolidate an existing FFEL Consolidation Loan.
If you want to know more about this, you can always consult a student loan consolidation expert. Go online and look for a well-established consolidation company.
Benefits of consolidating student loans
Opting for student loan consolidation provides numerous advantages to borrowers. Major benefits are:
- Improvement of credit score, since all default loans will be paid off completely.
- Borrowers may seek and apply for new student loans once their default loans are paid off.
- Borrowers need to take care of just one monthly payment instead of tracking multiple payments.
- Since the payments will be linked to the debtor’s income after the loan consolidation, the payments will be easier to manage. .
- Borrowers may also qualify for loan forgiveness.
It is advised that borrowers who wish to benefit from the above advantages should team up with a reputed student loan consolidating company to know more.
Debtors should look for a loan consolidation firm that is willing to listen to their unique financial situation and not just consider the numbers. A reputed firm works with a borrower by taking into account their goals and suggests the most appropriate repayment options.