5 TIPS ON STUDENT LOAN DEBT, SAVE MONEY NOW

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Are you sick of paying interest on your monthly student loans with no end in sight? Afraid of cash-flow problems that may prevent you from paying your student loans on time? I know I was and there is a solution to this problem. It is called student loan consolidation.

What is Student Loan Consolidation?

Student loan consolidation simply means consolidating all your student loans into a single loan with a monthly payment plan. Effectively, all your previous student loans are written off and a new student loan is created which you have to pay off monthly.

Benefits of Student Loan Consolidation

Here are some of the benefits of student loan consolidation

1. Lower monthly payments

By consolidating all your student loans into one loan, you only need to pay off one loan monthly instead of several student loans monthly. Thus, your monthly payment is lower

2. Pay only one loan monthly instead of several student loans monthly

It is a lot easier if you have to manage only one student loan instead of several student loans with different payment deadlines. Also, sometimes with many student loans, you may ended up forgetting to pay one student loan.

3. Low, fixed interest rate

By consolidating your student loans, you will be able to take advantages of low, fixed interest rates. Currently, by law, student loan consolidation rates cannot exceed 8.25%. Furthermore, national interest rates are at a 40-year low therefore this is a good time to get one.

4. No credit card check or processing fees

No credit card check is required during the application of a student loan consolidation. The payment plans and terms are usually quite flexible in that they can customize it according to your financial standing.

5. Make monthly student loan payment electronically

While it is not necessary to make payment electronically, most lenders will knock 0.25% off your student loan rates if you make payment electronically. Also, using direct debit from your bank account will prevent you from forgetting to make a payment.

Sometimes it can get quite confusing as to the qualification of applying for a student loan consolidation. The official stand from the government is that students who are still in their grace period or who are still studying in school may qualify for government student loan consolidation

The government student loan consolidation nowadays are quite competitive compared to private sector, therefore I would recommend going for a government student loan consolidation. With so many benefits of getting a student loan consolidation, it is quite obvious to save money in the long run is to get one.

Ricky Lim works in a finance company specialising in student loan consolidation. Get more information, tools and resources on student loan consolidation, visit this site: http://about-studentloan.com

He also operates a home loan information site

Article Source: http://EzineArticles.com/?expert=Ricky_Lim

What about Student loans, what are my options on consolidating those school fee debts?

School loan consolidation provides you an opportunity to merge all your loans and pay only once for all of them. There are a number of options catering to almost everyone's needs. These options are divided into the following two major categories:

1. Federal loan consolidation
2. Private loan consolidation

1. Federal:

This type of school loan consolidation provides financial help to those who are enrolled at schools that participate in federal aid programs. By school we mean a two-year or four-year degree awarding public or private college, university or trade school.

Consolidation can help reduce your student loan debt by fixing and reducing the interest rate on your loans. This loan option will also combine your separate loan debts into one package thus managing your debt paying options.

Eligibility for federal loan:

In order to qualify for federal consolidation, one should check out the following things before applying for it.

* The candidate should no longer be enrolled in school (defined as being enrolled less than half-time)
* You must be in the 'grace period' of the loan or must be actively repaying your loan.
* Most consolidation companies require a minimum loan amount i.e. $10,000 is typical.

Types of Federal Loan:

1. Federal Family Education Loan Program: These are public-private loans aimed to deliver and administer guaranteed educational loans to parents and students. It provides the following types of loan for post-secondary education:

* Stafford Loan: Stafford loan consolidation is a fixed-rate refinancing program that combines all your existing federal loans into one new loan.
* PLUS Loan: PLUS loan consolidation is another form of federal school loan that allows you to pack all your PLUS loans previously taken to finance your kid's education, into a single loan with a lower monthly payment.
* Graduate Stafford Loan Consolidation: Graduate Stafford loan consolidation is a great financial tool for those who have recently graduated and are trying to pay off their graduate Stafford loans.

1. Federal Direct Consolidation Loans: Federal direct loan consolidation is a practical repayment tool that enables you to combine all your Federal Direct student loans into a single loan. Federal Direct loan offers the following consolidation options:

· Direct Subsidized Consolidation Loans: Thiscombines federal student loans eligible for interest subsidies, such as subsidized FFELP, Direct Loans and Federal Perkins Loans.

· Direct Unsubsidized Consolidation Loans: Thiscombines federal student loans not eligible for interest subsidies. If any one of the loans to be consolidated is unsubsidized, then you are eligible for Unsubsidized Direct Consolidation Loan.

· Direct PLUS Consolidation Loans: Thiscombines FFELP PLUS and Direct PLUS loans.

Benefits of Federal Loan:

Various benefits can be availed if you opt for federal program. Some of them are stated below:

* Reduces monthly payments
* Provides fixed interest rates
* Requires only one payment every month
* Improves credit rating
* Offers flexible payment options
* No pre-payment penalties

Disadvantages of Federal Loan Consolidation:

If compared to the benefits, consolidation has lesser disadvantages, which are mentioned below:

* Takes long to pay back
* Increases the total amount of loan
* Locked interest rates i.e. if interest rates go down, your rate will not decrease/change
* Lose benefits (if any) from previous loans

2. Private loan :

The purpose of private loan consolidation is more or less the same as that of federal loan consolidation but the procedure and features differ. It combines only your outstanding private education loans into one package. Private loans cover educational expenses like tuition, accommodation or any other educational expenses.

Eligibility for private loan consolidation:

As there are few eligibility rules to qualify for federal loan consolidation, similarly the private loan levies some regulations on every application that it receives for necessary approval. These criteria are mentioned below:

* The candidate should be atleast half-time enrolled in a degree or technical/diploma program
* Have a minimum of $10,000 in private educational loans
* Is in repayment status of private education loans at the time of application
* Have good credit standing
* Have proof of accommodation and present income

Benefits of private loan:

* Improves the payment history and credit score
* Gives competitive interest rate against non-government loans
* Provides a way to consolidate virtually all private and non-federal educational loans
* Allows you to consolidate education-related debt as well as education-related credit card debt
* Enable you to write fewer checks and may also lower down the monthly installments
* Longer repayment term (up to 30 years in some cases)
* Lower monthly payment

Federal loan versus Private - The Difference:

Federal loan consolidation is a tool to refinance federal education loan only while Private loan consolidation is a way to refinance private education loan only. The main difference is that a federal loan consolidation comes with a fixed interest rate while private loan consolidation comes with a market rate that may be fixed or variable.

If you consolidate both federal and private loans, you should make sure to keep them separate, i.e. refinancing a federal loan with a private loan will most likely result in a much higher interest charge, if compared to the amount you would pay by keeping them separately.

Our Advice: Research thoroughly about all consolidation options first and only then choose to consolidate your school loans.