Loan Consolidation Student Loans

Things You Should Know About Loan
Consolidation Student Loans
Why need to know Loan Consolidation Student Loans? With the rising cost of higher education, a large number of students have been forced to finance their education through education loans. While easy to get student loans and come with the cheapest rates of interest, paying them off is not easy for most students who find themselves facing too much problem of student loan debt.

The students usually feel heavy to pay back student loan repayments as the loan does not count considering that other types of student loan debt. Most people also collected a large amount of other loans like car loans and credit card bills, which also require financing after graduation. The best way out of this debt trap is to go for student loan consolidation. A student loan consolidation program can be a lifesaver for students and can be totally negative turnaround student loan debt situation to one of the cuff.

How to Refinance My Student Loan

Federal scholarships and financial assistance are not sufficient to cover the rising cost of education.

Student Loan Consolidation

In spite of various initiatives by government organizations, dependence on alternative sources of finance has become inevitable. While some of the loans offered by Federal Agencies are subsidized and are need based loans, the rest are based on the credit score of the borrower. Except for certain benefits relating to interest rate and repayment options, both federal as well as private student loans turn to be a huge burden on the students.

Student Loan Debt: My Personal Story

I have a very personal story to share with all you people out there with student loan debt. I am sharing this story in the hope that as many people as possible can learn from my mistakes. This is a true story that happened to me back in 1999.

I had been out of school for quite a while. I was working at a big law firm in New York City making a decent living, paying my bills and some of my debt. I had (foolishly) incurred a lot of credit card debt in my youth and I was really paying for it. I also had about $11,000 in student loan debt from a Federal Subsidized Stafford Loan I had taken out when I was in school. I wasn't paying my student loan debt. In fact, I completely ignored my student loan debt, throwing all the threatening letters I received into the trash! My thinking was, "what could they do to me? If I ignore the debt the government will step in a pay it off. Besides, those monthly payments are way too high!" There was a moderate amount of guilt associated with my actions, but it's hard to feel sorry for the richest government that has ever existed on the earth.So I was moving along with my life, happy to be slowly improving my credit rating by paying of my old credit card debt. I got a raise at work and started investing a large chunk of my paycheck into my employer's 401K plan. Yeah, things were OK and getting better. It was at this point in my life that I opened a business checking account because I had big plans of quitting my job and starting my own business. I started making small deposits to this account every week or so and soon I had over $1000 in that business account. And that's when it happened.

One day, I was performing a routine balance check on my business bank account and found that my bank account was completely empty! Shock? Horror? No, it was more than that. I nearly fainted! I immediately got on the phone with the bank to get an explanation. They informed me that my money was legally withdrawn from my account by a law firm representing the government in student loan default matters. I got the phone number for that law firm and called. They told me that they had obtained a "judgment" against me in court 3 or 4 years prior, and that they had every legal right to seize any and all money in my bank accounts. Wow. That's some serious power, eh?

So, all those threatening letters I was throwing away: I really shouldn't have done that! If I had responded to those letters, I would have been able to avoid the nightmare that I have just described. If I had contributed a little less to my 401K and made payments on my student loan, I would have avoided having my bank account emptied. And to add insult to injury, because my business bank account was empty, the bank assessed some very large and nasty fees due to lack of funds.

How does college loan consolidation help?

Student loan consolidation

Many students who desire pursuing higher education will look for college loan to meet their educational expenses. Though students born in a well-to-do rich family or availing scholarship, most of them find real hard to meet the education bills every year. Here comes the picture of college loan! This loan plays a significant role during the time of college study. This college loan grants excellent financial support to students and help them complete their graduation.

There are several financial institutions that grants college loan and permits student to settle the loan repayment till they complete their graduation and gain decent income. Your debts will become massive if you remain still without paying them. Every month you fall with penalties and addition fee for late payment. All these will be outrageous and to overwhelm the situation, the college loan consolidation helps! With college loan consolidation you can overwhelm your economical woes and make your path clear.

There are several service provide who grant best college loan consolidation and they keep you safe out from the reach of hassles and troublesome hang-ups. No matter even if you have a bad credit history, as college loan consolidation helps you better in renovating your credit card rating.

Student Loan Consolidation Tips

* The best time to consolidate
student loans is during your grace
period. You are in the grace
period after you are out of school
but before entering repayment,
which is usually 6 months after
your graduation. If you conso
lidate during your grace period
you can usually qualify for a
lower interest rate.

* The federal government recently
passed a law that allows borro
wers to consolidate their student
loans with any eligible FFELP
(Federal Family Education Loan
Program) lender. This means that
your choice of a lender is much broader now than it was in the past.

* The interest rate on a federal consolidation loan is set according to federal law. It’s always to your benefit to get the lowest interest rate you can from a lender, but interest rates on federal consolidation loans are fixed for the life of the loan and can’t exceed 8.25%.

[Pullout: Student Loan Consolidation Tips]

* If you have a mix of federal and private student loans, don’t combine them into one consolidation loan. You will lose the federal benefits inherent in your federal loans. These federal benefits include not only the 8.25% interest cap, but deferment and forbearance options that you can use if you fall upon difficult economic times.

* The Higher Education Act specifically requires that federal student loan consolidations must have fixed interest rates, no fees to process or approve the loan, go through no credit checks, have no prepayment penalties and get a lower interest rate if you consolidate during your grace period.