College Loan Consolidation
College loan consolidation requires debtors to apply for a loan which pays off multiple student loans. Students who have private and federal education loans can sometimes benefit from consolidating multiple loans into one account. Loan consolidation not only eliminates the need to keep track of multiple payment dates, but can also reduce the amount of interest along with lowering monthly payments.
Before entering into college loan consolidation it is important to comparison shop. Debtors should strive to obtain the lowest possible interest rate. If students do not have a high FICO score or have poor credit, they may want to consider obtaining a co-signer. Otherwise, the interest charged against consolidated student loans can be substantially higher.
Financial experts recommend consolidating private student loans separately from federal student loans. In order to consolidate federal student loans, applicants must meet certain lending requirements. These include having more than one government student loan and being current on each loan. Federal education loans require students to adhere to a six-month post-graduate grace period and pay three payments in full before loan consolidation can occur.
Federal Direct consolidation loans are available through the Department of Education. Federal Direct allows students to consolidate both subsidized and unsubsidized student loans. However, when students consolidate both subsidized and unsubsidized loans, lenders are required by law to enter into two separate consolidation loans to monitor transactions. Although students have two loans, payments can be combined so students only have one monthly payment.
Most federal student loans can be refinanced for consolidation purposes including: Perkins, Federal Family Education Loan (FFEL), Parent PLUS, Stafford and William D. Ford Federal Direct Loan.
Post-graduate students with Direct Loans can apply for college loan consolidation with an online application at LoanConsolidation.ed.gov. Applicants should organize federal student loan information including lenders, account numbers and outstanding balance prior to submitting their consolidation loan application.
One major benefit of consolidating federal college loans through the federal government's guaranteed loan program is students are not required to undergo a credit check. Therefore, this loan consolidation program is perfect for individuals with less-than-perfect credit.
Private college loans can be consolidated through the same lender as federal college loan consolidation. Private college loans include educational funds obtained through banks, credit card companies and SallieMae.
Prior to entering into college loan consolidation, post-graduates should look into alternatives such as student loan forbearance, deferment or forgiveness. Government programs offer student debt forgiveness to individuals who obtained a degree in certain public service fields. These include: Teacher Loan Forgiveness Program, Nurse Loan Forgiveness, and Public Interest Lawyers, and Economic Hardship. Details of student loan forgiveness programs are presented at CollegeScholarships.org.
College education loans cannot be discharged through personal bankruptcy unless the bankruptcy court rules the debtor's financial circumstances are in extreme dire straits. Rarely, do judges grant approval to expunge outstanding student loans.
Although college loan debt cannot be discharged through bankruptcy, debtors might be able to restructure the debt through Chapter 13 payments. Debtors should consult with a bankruptcy lawyer to determine if college debts qualify for bankruptcy restructure.
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Published on April 12, 2010 at 02:23 AM | Comments: 3