What You Need to Know About Consolidating Your Federal Student Loans
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So you’ve graduated from college, and after the relief and the celebrations, the realization of your adult responsibilities may be starting to set in: the job search, rent payments, utility bills. And now here’s another one: All those federal student loans that made your college years financially possible may be coming up for repayment soon. As grace periods end, whether you and your parents face just one student loan or multiple student loan balances, payments and payment dates, Federal Consolidation Loans can help simplify your repayment options and may lower your monthly loan payment obligations. NextStudent, a leading Phoenix-based education funding company, features Federal Consolidation Loans, available to both parents and graduates, that offer all the benefits of federal student loan consolidation along with NextStudent rate reduction incentives that reward responsible repayment. Federal Student Loan Consolidation Eligibility In order to be eligible for student loan consolidation (http://www.nextstudent.com/consolidation_loans/consolidation_loans.asp), a borrower’s federal student loans must be in one of the following: Grace period Authorized deferment Forbearance Repayment Federal student loans (http://www.nextstudent.com/student-loans/student-loans.asp) that are delinquent or in default cannot be consolidated through NextStudent. In addition, students consolidating their own federal student loans can only be attending school less than half time. But, parents: You can consolidate the PLUS loans you took out for your children’s education as soon as they’ve been fully disbursed and have entered repayment, even if your children are still in school. However, parents’ PLUS loans can’t be consolidated with children’s Stafford loans. Understanding Your Federal Student Loan Consolidation Rate The interest rate for your Federal Consolidation Loan will be a fixed rate and will be based on the weighted average of the interest rates on the student loans being consolidated. In a weighted average, the larger the loan being consolidated, the more the interest rate is factored into the average. The weighted average is then rounded up to the nearest 0.125%, with a maximum interest rate of 8.25%. This will be your fixed interest rate on your Federal Consolidation Loan. The Benefits of Federal Student Loan Consolidation The thought of repaying thousands of dollars of student loan debt can be overwhelming, especially when you have multiple student loans (http://www.nextstudent.com) with several different lenders or servicers. Besides the convenience of combining all your existing federal education loans into one single loan with one monthly payment, a Federal Consolidation Loan offers several other benefits: A fixed interest rate—no more worries about variable interest rates going higher and leaving you guessing about your monthly payment amount Interest rate capped at 8.25% No prepayment penalties—you won’t be charged for paying off your consolidation loan early No credit check and no application fees Consolidation loans are also often repaid over longer periods (15–30 years), which may lower your monthly payments by up to 60%. Rate-Reduction Advantages with NextStudent Besides all the benefits of federal student loan consolidation (http://www.nextstudent.com), a Federal Consolidation Loan with NextStudent features additional benefits you won’t find with many other lenders: We’ll reduce your rate by 0.25% right off the bat if you sign up for our automatic payment plan to have your loan payments automatically debited from your savings or checking account. No stamps, no hassle, no having to remember to make your payments every month, AND you lower your monthly payment—make your life more convenient and get rewarded for doing it. We’ll reduce your rate by 1% after you make 36 on-time payments—and lock that rate reduction for the life of the loan, even if you miss a payment later on down the road. We know repayment can seem overwhelming now, especially if you’ve just graduated. NextStudent can help. A Federal Consolidation Loan with NextStudent could help you simplify your finances, may lower your total monthly payment, and may give you a little more time to pay back your student loans—the breathing room you need as you navigate that transition between college and the real world. NextStudent believes that getting an education is the best investment you can make, and we are dedicated to helping you pursue your education dreams by making college funding simple. Learn more about Student Loans, Private Student Loans (http://www.nextstudent.com/private_loans/private_loans.asp) and Student Loan Consolidation at NextStudent.com
Jeff Mictabor is an enthusiast on the topic of student loan issues in the news. He has been writing for the past 10 years for a variety of education publications. He now offers his writing services on a freelance basis.
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