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Student Loan Consolidation

A Student Consolidation Loan is essentially a plan, designed to help students, as well as parent borrowers simplify loan repayment by allowing the borrower to merge several types of student loans with different repayment schedules into a single loan.

There are different laws regarding students, and therefore student loans are consolidated a little differently, because of the fact that student loans are guaranteed by the government. In the federal student loan consolidation scheme, existing loans are bought and closed by a loan consolidation company, or by the Department of Education. However, this depends on what type of student loan the borrower holds. The student loan rate varies, i.e. interest rates for consolidation depend upon that particular year’s student loan rate. However, this student loan rate depends upon the 91 day Treasury bill rate at the last auction in May each year.

Student loan rates can fluctuate from the current low of 4.70% to a maximum of 8.25% and 9% for PLUS loans. As per the current student loan consolidation program, students are allowed to consolidate only once with a private consolidator, i.e. lender. After the first time, the student can only consolidate with the Department of Education. Upon consolidation, a fixed interest rate is set based on the then-current interest rate. Reconsolidating does not change that rate. If the student combines loans of different types and rates into one new consolidation loan, a weighted average calculation will establish the appropriate rate based on the then-current interest rates of the different loans being consolidated together

Student loan consolidation is often referred to as refinancing, which is incorrect because the loan rates are not changed, merely locked in. Unlike private sector debt consolidation, student loan consolidation does not incur any fees for the borrower; private companies make money on student loan consolidation by reaping subsidies from the government.
Student loan consolidation can be beneficial to a students' credit rating, but it's important to note that not all student loan consolidation companies report their loans to all credit bureaus.

There are several services offering student consolidation loans on the internet. However, the student and the parent still should be extremely careful in deciding to consolidate their loan. Make a thorough search before making any decisions. It is best to choose a lender who is offering low monthly rates, and good facilities, but with no strings attached. It will always help to seek some councelling, i.e. choose a consolidation councelling agency, which will guide the student and/or parent to make the right decisions regarding consolidation and related issues.

Generally, Students should consolidate their loans after every time they switch schools, between any breaks (summer break not included), and whenever enrolled for less than 6 credits.

Consolidation rates allow you to extend payment to as much as 30 years. This way the student can completely focus on studying, and getting a good job. Once the student gets a job that pays well, paying back all debts shouldn’t be as difficult as it seemed initially!

Student Consolidation Loans can help students at a time when their life styles and position needs it, should you be a student and require advice on student loan consolidaiton, then contact one of Finance Incs debt professionals who will guide you through the legislation and its benefits.

For a complete debt management solution, visit www.finance-inc.co.uk

For IVA (Individual Voluntary Arrangement) visit www.1va.co.uk