Medical News Today Loan consolidation is an important step in dealing with your student debt. AMSA members are eligible for the AMSA (American Medical Student Association) Loan Consolidation Program. It is important to understand loan consolidation and the real terms of any loan or consolidation contract. [click link for full article]
Sunday, December 24, 2006
Friday, December 22, 2006
NextStudent Urges Borrowers to Complete FAFSA Early to Qualify for Federal Stafford Student Loans
PHOENIX, AZ -- (MARKET WIRE) --
Many students neglect to complete the FAFSA(Free Application for Federal Student Aid) until immediately before therequired deadline, instead of getting it in as close as possible to Jan. 1,according to NextStudent, the Phoenix-based premier education fundingcompany. Since Federal Stafford Student Loans are first distributedto those who apply for it earliest in the cycle, those who apply later ...
Thursday, December 21, 2006
What is Student Loan Consolidation?
Getting a student loan is a great way for students who need financial aid to help pay for their college. The downside is that students often leave college with quite a huge debt. Also, they often have multiple loans from different lenders, meaning they are writing more than one loan repayment check each month. The solution to this problem is loan consolidation.
Loan consolidation means bundling all your student loans into a single loan with one lender and one repayment plan. When you consolidate your student loans, the balances of your existing student loans are paid off, with the total balance rolling over into one consolidated loan. The end result is that you have only one student loan to pay on. The good thing is that both students and their parents can consolidate loans.
So how do you decide if you should consolidate your loans? First of all, loan consolidation offers many benefits. It locks in a fixed, usually lower, interest rate for the term of your loan, potentially saving you thousands of dollars (depending on the interest rates of your original loans). It lowers your monthly payment, and it combines your student loan payments into one monthly bill. Also, consolidated loans have flexible repayment options and no fees, charges, or prepayment penalties. There are also no credit checks or co-signers required.
You should consider consolidating your loans if the consolidation loan would have a lower interest rate than your current loans, particularly if you are having trouble making you monthly payments. However, if you are close to paying off your existing loans, consolidation may not be worth it.
What does this mean for the interest rate of the consolidated loan?
The interest rate for your consolidated loan is calculated by averaging the interest rate of all the loans being consolidated and then rounding up to the next one-eighth of one percent. The maximum interest rate is 8.25 percent.
To figure your interest rate, visit www.loanconsolidation.ed.gov for an online calculator that will do the math for you.
How much you save by consolidating loans depends on what interest rate you get and whether you choose to extend your repayment plan. According to Sallie Mae, the leading provider of student loans in the United States, consolidating student loans can reduce monthly payments by up to 54 percent. However, the only way to reduce your payment this much is to extend your repayment plan. You typically have 10 years to repay student loans, but, depending on the amount you're consolidating, you can extend your repayment plan all the way up to 30 years. Remember that if you choose to extend your repayment term, it will take longer to pay off your overall debt and you'll pay more in interest. There are no preypayment penalties, so you can always choose to pay off the loan early.
In order to consolidate your loans, you must meet the following criteria:
-You are in your six-month grace period following graduation or you have started repaying your loans
-You have eligible loans totaling over $7,500
-You have more than one lender
-You have not already consolidated your student loans, or since consolidation you have gone back to school and acquired new student loans
The following types of loans can be consolidated:
-Direct Subsidized and Unsubsidized Loans
-Federal Subsidized and Unsubsidized Federal Stafford Loans
-Direct PLUS Loans and Federal PLUS Loans
-Direct Consolidation Loans and Federal Consolidation Loans
-Guaranteed Student Loans
-Federal Insured Student Loans
-Federal Supplemental Loans for Students
-Auxiliary Loans to Assist Students
-Federal Perkins Loans
-National Direct Student Loans
-National Defense Student Loans
-Health Education Assistance Loans
-Health Professions Student Loans
-Loans for Disadvantaged Students
-Nursing Student Loans
You can consolidate your loans through any bank or credit union that participates in the Federal Family Education Loan Program, or directly from the U.S. Department of Education. The loan terms and conditions are generally the same, regardless of where you consolidate. You may want to check first with the lenders that hold your current loans.
If all your loans are with one lender, you must consolidate with that lender.
If you decide to consolidate your student loans, remember that you can only do so once unless you go back to school and take out more loans. Therefore, you will want to make sure you get the best deal the first time. The interest rate will be the same from all lenders, but some lenders may offer future rate discounts for prompt payment and a discount for having monthly payments directly debited from your account.
You can consolidate your loans any time during your six-month grace period or after you have started repaying your loans. If you consolidate during your grace period, you may be able to get a lower interest rate. However, since you will lose the rest of the grace period, it is a good idea to wait until the fifth month of the grace period before consolidating. The consolidation process usually takes about a month to a month and a half.
Loan consolidation means bundling all your student loans into a single loan with one lender and one repayment plan. When you consolidate your student loans, the balances of your existing student loans are paid off, with the total balance rolling over into one consolidated loan. The end result is that you have only one student loan to pay on. The good thing is that both students and their parents can consolidate loans.
So how do you decide if you should consolidate your loans? First of all, loan consolidation offers many benefits. It locks in a fixed, usually lower, interest rate for the term of your loan, potentially saving you thousands of dollars (depending on the interest rates of your original loans). It lowers your monthly payment, and it combines your student loan payments into one monthly bill. Also, consolidated loans have flexible repayment options and no fees, charges, or prepayment penalties. There are also no credit checks or co-signers required.
You should consider consolidating your loans if the consolidation loan would have a lower interest rate than your current loans, particularly if you are having trouble making you monthly payments. However, if you are close to paying off your existing loans, consolidation may not be worth it.
What does this mean for the interest rate of the consolidated loan?
The interest rate for your consolidated loan is calculated by averaging the interest rate of all the loans being consolidated and then rounding up to the next one-eighth of one percent. The maximum interest rate is 8.25 percent.
To figure your interest rate, visit www.loanconsolidation.ed.gov for an online calculator that will do the math for you.
How much you save by consolidating loans depends on what interest rate you get and whether you choose to extend your repayment plan. According to Sallie Mae, the leading provider of student loans in the United States, consolidating student loans can reduce monthly payments by up to 54 percent. However, the only way to reduce your payment this much is to extend your repayment plan. You typically have 10 years to repay student loans, but, depending on the amount you're consolidating, you can extend your repayment plan all the way up to 30 years. Remember that if you choose to extend your repayment term, it will take longer to pay off your overall debt and you'll pay more in interest. There are no preypayment penalties, so you can always choose to pay off the loan early.
In order to consolidate your loans, you must meet the following criteria:
-You are in your six-month grace period following graduation or you have started repaying your loans
-You have eligible loans totaling over $7,500
-You have more than one lender
-You have not already consolidated your student loans, or since consolidation you have gone back to school and acquired new student loans
The following types of loans can be consolidated:
-Direct Subsidized and Unsubsidized Loans
-Federal Subsidized and Unsubsidized Federal Stafford Loans
-Direct PLUS Loans and Federal PLUS Loans
-Direct Consolidation Loans and Federal Consolidation Loans
-Guaranteed Student Loans
-Federal Insured Student Loans
-Federal Supplemental Loans for Students
-Auxiliary Loans to Assist Students
-Federal Perkins Loans
-National Direct Student Loans
-National Defense Student Loans
-Health Education Assistance Loans
-Health Professions Student Loans
-Loans for Disadvantaged Students
-Nursing Student Loans
You can consolidate your loans through any bank or credit union that participates in the Federal Family Education Loan Program, or directly from the U.S. Department of Education. The loan terms and conditions are generally the same, regardless of where you consolidate. You may want to check first with the lenders that hold your current loans.
If all your loans are with one lender, you must consolidate with that lender.
If you decide to consolidate your student loans, remember that you can only do so once unless you go back to school and take out more loans. Therefore, you will want to make sure you get the best deal the first time. The interest rate will be the same from all lenders, but some lenders may offer future rate discounts for prompt payment and a discount for having monthly payments directly debited from your account.
You can consolidate your loans any time during your six-month grace period or after you have started repaying your loans. If you consolidate during your grace period, you may be able to get a lower interest rate. However, since you will lose the rest of the grace period, it is a good idea to wait until the fifth month of the grace period before consolidating. The consolidation process usually takes about a month to a month and a half.
School district refinances debt
School district refinances debt (Vandalia Leader-Union)
In what Superintendent Rich Well called a "pro-active rather than re-active measure," a three-part plan to refinance the debt of the Vandalia Community School District was approved at a special meeting of the district board last Thursday.
Personal Finance: Borrowers Go Private
Personal Finance: Borrowers Go Private (Real Estate News)
College students increasingly rely on corporate lenders
Why You Should Consolidate Your Student Loans
Graduation is just around the corner for thousands of students, and shortly after they walk down the aisle, many in the Class of 2006 will find themselves facing hardships they didn't anticipate when they began the pursuit of their degree.
Source : thesunchronicle.com
PERSONAL FINANCE : Borrowers go private
Last year, before the start of the fall semester at Southern Adventist University, junior Debbie Peter realized that with tuition, books and food, her federal student loan wouldnt get her through the school year.
Source Chattanooga Times Free Press
Source : thesunchronicle.com
PERSONAL FINANCE : Borrowers go private
Last year, before the start of the fall semester at Southern Adventist University, junior Debbie Peter realized that with tuition, books and food, her federal student loan wouldnt get her through the school year.
Source Chattanooga Times Free Press
Tuesday, December 19, 2006
Paying up: You can handle student loans if you make an effort
If your student loans loom large now, just try ignoring them. They'll get much, much bigger.
Once your loans go into default, your lender would probably turn your account over to a collection agency. The agency's fees would be added to the balance, increasing the amount you owe. The government also might withhold your tax refund and garnish some of your wages.
And there's no statute of limitations on the government's authority to pursue unpaid student loans, said Deanne Loonin, staff attorney for the National Consumer Law Center. "That means these debts can follow you your whole life."
The encouraging news is that these consequences are avoidable. The federal loan program offers numerous alternatives for borrowers who can't afford their monthly payments. To take advantage of them, you need to contact your lender as soon as you run into trouble.
You're required to start making payments on your student loans at the end of your grace period, typically six months after you graduate or leave school.
Payment options
If you can't afford the monthly payments under the standard plan, talk to your lender about other repayment programs. The most common are:
• Extended repayment. That will lengthen the term of your loan to up to 25 years. Your payments will be lower, but you'll pay more in interest. There's no penalty, though, for paying off your loans early, so you can always increase your payments.
• Graduated repayment. This plan lets you make interest-only payments for up to four years. After that, your payments will rise gradually so your loan will be repaid in 10 years.
• Income-sensitive repayment. Your monthly payment will be based on your income and the amount you owe. Borrowers must apply annually for this option. Your payments must be large enough to cover the interest on your loan. This plan is most appropriate for borrowers who expect their income to increase - or their expenses to decline - in the next few years.
• Loan consolidation. This is worth considering if you have several federal loans. You can combine them into a single loan and extend the term for up to 30 years.
If you can't pay
If you can't afford your loan payments, there are alternatives:
• Loan deferment. Borrowers who return to college, are unemployed or are suffering economic hardship may defer repaying their loans for up to three years.
• Forbearance. This also lets borrowers temporarily stop payments or pay a reduced amount. Forbearance is granted at the discretion of the lender.
The biggest drawback to forbearance: Interest will accrue on the loan. That will increase the amount you owe when you emerge from forbearance.
It's important to continue making payments until your request for deferment or forbearance is granted. If you fail to make your payments for nine months, your loan will be declared in default, and you'll be ineligible for either form of relief.
Source : By Sandra Block
Gannett News Service
Once your loans go into default, your lender would probably turn your account over to a collection agency. The agency's fees would be added to the balance, increasing the amount you owe. The government also might withhold your tax refund and garnish some of your wages.
And there's no statute of limitations on the government's authority to pursue unpaid student loans, said Deanne Loonin, staff attorney for the National Consumer Law Center. "That means these debts can follow you your whole life."
The encouraging news is that these consequences are avoidable. The federal loan program offers numerous alternatives for borrowers who can't afford their monthly payments. To take advantage of them, you need to contact your lender as soon as you run into trouble.
You're required to start making payments on your student loans at the end of your grace period, typically six months after you graduate or leave school.
Payment options
If you can't afford the monthly payments under the standard plan, talk to your lender about other repayment programs. The most common are:
• Extended repayment. That will lengthen the term of your loan to up to 25 years. Your payments will be lower, but you'll pay more in interest. There's no penalty, though, for paying off your loans early, so you can always increase your payments.
• Graduated repayment. This plan lets you make interest-only payments for up to four years. After that, your payments will rise gradually so your loan will be repaid in 10 years.
• Income-sensitive repayment. Your monthly payment will be based on your income and the amount you owe. Borrowers must apply annually for this option. Your payments must be large enough to cover the interest on your loan. This plan is most appropriate for borrowers who expect their income to increase - or their expenses to decline - in the next few years.
• Loan consolidation. This is worth considering if you have several federal loans. You can combine them into a single loan and extend the term for up to 30 years.
If you can't pay
If you can't afford your loan payments, there are alternatives:
• Loan deferment. Borrowers who return to college, are unemployed or are suffering economic hardship may defer repaying their loans for up to three years.
• Forbearance. This also lets borrowers temporarily stop payments or pay a reduced amount. Forbearance is granted at the discretion of the lender.
The biggest drawback to forbearance: Interest will accrue on the loan. That will increase the amount you owe when you emerge from forbearance.
It's important to continue making payments until your request for deferment or forbearance is granted. If you fail to make your payments for nine months, your loan will be declared in default, and you'll be ineligible for either form of relief.
Source : By Sandra Block
Gannett News Service
Pros and Cons of student loans
If you're having trouble tracking down your student loans, your college financial aid office might be able to help. You also can get information about your federal student loans at the National Student Loan Data System, www.nslds.ed.gov.
• Federal Family Education Loan Program loans. These loans are provided by private lenders and are guaranteed by the federal government. Most Stafford loans are FFELP loans.• Federal Direct Student Loan Program loans. These loans are provided by the U.S. government directly to students. For more information, go to www.ed.gov/directloan.
• Private student loans. These loans often are issued by the same lenders that provide FFELP loans, but they're not guaranteed by the federal government. Interest rates on these loans are usually variable. In addition, private lenders aren't required to offer the same repayment options available under the federal student loan program. For information about these loans, contact the lender.How to reduce the amount of interest on your student loans:
• Arrange for automatic withdrawal from a checking or savings account. Most lenders will reduce your interest rate by a quarter of a percentage point if you arrange for automatic withdrawal.• Pay on time. Many lenders offer another rate reduction for borrowers who make a specific number of on-time payments. Some lenders will reduce your rate by up to 1 percentage point.In addition, make sure you take advantage of the tax deduction for student loan interest. Eligible taxpayers can deduct up to $2,500 in student loan interest a year.That is an above-the-line deduction, so you don't have to itemize to claim it.
• Federal Family Education Loan Program loans. These loans are provided by private lenders and are guaranteed by the federal government. Most Stafford loans are FFELP loans.• Federal Direct Student Loan Program loans. These loans are provided by the U.S. government directly to students. For more information, go to www.ed.gov/directloan.
• Private student loans. These loans often are issued by the same lenders that provide FFELP loans, but they're not guaranteed by the federal government. Interest rates on these loans are usually variable. In addition, private lenders aren't required to offer the same repayment options available under the federal student loan program. For information about these loans, contact the lender.How to reduce the amount of interest on your student loans:
• Arrange for automatic withdrawal from a checking or savings account. Most lenders will reduce your interest rate by a quarter of a percentage point if you arrange for automatic withdrawal.• Pay on time. Many lenders offer another rate reduction for borrowers who make a specific number of on-time payments. Some lenders will reduce your rate by up to 1 percentage point.In addition, make sure you take advantage of the tax deduction for student loan interest. Eligible taxpayers can deduct up to $2,500 in student loan interest a year.That is an above-the-line deduction, so you don't have to itemize to claim it.
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