Starting this summer, Uncle Sam will be your banker for federal student loans

After high school seniors graduate this season, they and their parents will soon face another time-honored tradition - paying college tuition.

But the new crop of college-bound freshmen this summer will experience a much different federal student loan program than in years past.

The loan process will be streamlined. Students will have one choice of lender instead of dozens. More money will be available for grants for needy students, and more of them will be eligible for the free money. Even some parents may stand a better chance of qualifying for a federal loan to make up any tuition shortage.

And families likely will hear more pitches from banks and credit unions lenders offering alternatives to a federal loan as they look for other ways to stay in the game, aid experts predict.

This is all happening because of a law passed earlier in the year that requires federal student and parent loans to come directly from Uncle Sam starting in July, instead of through private lenders.

Some schools have been getting loans straight from the government for years. But many others, including the University of Maryland, stuck with private lenders because of the services they provided. By cutting out these middlemen now, the government expects to save about $62 billion over a decade.

"It's a big change in terms of taxpayer savings and streamlining. But for students and families, it shouldn't feel like a big change," says Lauren Asher, president of the Institute for College Access & Success.

McDaniel College in Westminster, Md., made a smooth transition to direct lending during the spring semester, says Patricia Williams, director of financial aid. Students don't mind getting a loan from a single source, whereas before they often had no idea which lender to select, Williams says.

And the school no longer has to wait to get its tuition paid by loans as it did when a couple of private lenders had cash-flow problems, Williams says.

There are other benefits, too.

Some of the billions in savings will go toward increasing Pell Grants, which go to the neediest of students. The maximum grant will increase by $200 to $5,500 for the coming academic year. Also, a slight change in eligibility rules will allow up to a half-million more families to qualify, says Mark Kantrowitz, publisher of FinAid.org.

Parents also get a slightly better interest rate when taking out a federal Parent Loan for Undergraduate Students through direct lending. The fixed interest rate on a PLUS loan from direct lending is 7.9 percent, compared with 8.5 percent through a private lender.

That difference may not seem like much, but it can add up. A parent borrowing $25,000 will pay $957 less in interest over 10 years by getting the PLUS loan through direct lending than from a bank, Kantrowitz calculates.

Parents must pass a credit check to get a PLUS loan, though they are more likely to qualify under direct lending, Kantrowitz adds. According to the most recent figures, private lenders in the 2007-2008 academic year rejected 42 percent of parent applications, he says. Direct lending's denial rate was half that.

Even though private lenders won't be originating any federal loans, don't count them out. They will be shifting their focus toward making more private education loans, said Tim Ranzetta, president of Student Lending Analytics.

For example, Wells Fargo introduced a parent loan this month whose variable rate is tied to an index and the borrower's creditworthiness. Wells Fargo says parents could receive a rate ranging from 4.25 percent to 10.74 percent on a 15-year loan.

Lenders are getting more competitive with each other, too, with some lowering their rates recently, Ranzetta says.

Loan giant Sallie Mae, for instance, announced this month that it would reduce the variable rate on its Smart Option Student Loans by roughly a couple of percentage points. New rates range from 2.88 percent to 10.25 percent for the upcoming school year.

But families will have to dig deeper into the details before jumping into a low-rate private loan.

"It's important that borrowers understand these are variable rate loans, and there's no guarantee they will get or keep the lowest rate advertised," Asher warns. Over time, rates can rise and the loan could end up more expensive than a federal loan, she says.

Keep in mind that if you rely on financial aid to foot college bills, some types are better than others.

Grants and scholarships are at the top, of course, because they don't have to be repaid.

Federal student loans are your next best bet.

The student Stafford loan, for example, offers a fixed interest rate, flexible repayment options and loan forgiveness in certain cases. All students can borrow from Uncle Sam, but the government will pay the interest for financially needy students while they're in school.

The interest rate is 6.8 percent on loans the government doesn't subsidize, and 4.5 percent on new subsidized loans starting July. Stafford borrowers can receive up to $5,500 for their freshman year, rising up to $7,500 the senior year.

If federal student loans don't cut it, parents can take out a PLUS loan to cover any shortfall.

"Federal loans have so many built-in advantages," Ranzetta says. A parent with a financial setback can defer payments on PLUS, but a private lender may not give them that option, he says.

Private education loans, which have fluctuating rates and less generous repayment options, should be the last resort _ or second to the last.

"The only thing they are better than is credit cards," Kantrowitz says. He suggests families are better off taking out a fixed-rate home equity loan than a private education loan.

Parents also must have good credit scores to qualify for a private education loan, while students will likely need a co-signer.

Even more changes to the federal loan program are in the works, though a few years away.

Right now, graduates with low pay compared to their debt burden can opt for an income-based repayment plan. Payments never exceed 15 percent of discretionary income and can be zero if a paycheck is meager enough. After 25 years of making payments, any remaining balance is erased.

But beginning with loans made July 2014, payments under this plan won't exceed 10 percent of discretionary income. And balances can be wiped out after 20 years of payments.


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Debt Consolidation Loans – Refinance to a Lower Interest Rate

Digital News Report – A debt consolidation loan is refinancing several loans into one with new repayment terms and interest rates. Getting a debt consolidation loan is often sought out by people that have multiple credit card balances and sometimes a student loan or two. When you add up all of the minimum monthly payments that each lender wants it may be impossible to come up with the money that is required. By getting a debt consolidation loan, you can give yourself a chance to reduce the monthly payment requirements by either lowering the interest rates or by extending the length of the loan. Credit card interest rates vary greatly, but rates as high as 29 percent interest but is dependent on the state you live in. Chances are pretty good that you can lower your interest rate by refinancing with a debt consolidation loan.

When you shop for a debt consolidation loan lender, you will want to have a list of all of the credit cards and student loans that you have. You will want to itemize that amount you owe to each lender and the monthly payment amount you pay each month. Also right down the APR interest rate that each one is charging. That way you can decide if you are going to benefit by refinancing with a debt consolidation loan.

You also want to know what your credit rating score is when you are shopping around for a debt consolidation loan. Your credit score can cause your interest rate to be lower if you have excellent credit. If you have a bad credit score, you can still find debt consolidation lenders for poor credit, but you will more than likely pay more in interest.

You can get either an unsecured debt consolidation loan or a secured one. This is also depending on your credit rating, and the amount of debt you owe. An unsecured loan is also sometimes called a personal loan. A secured loan is one that you put up real property as collateral, this is often a home or a car in exchange for the loan financing. If you fail to make the payment you can lose your property. An unsecured loan probably will have a higher interest rate because of the risk the lender is taking, while a secured loan can reduce the interest rate because of less risk involved.

Make sure to ask plenty of questions when shopping for a debt consolidation loan. You will also want to read the terms of the loan before signing it and see if there are any prepayment penalties, limits on how much you can pay each month, etc. If you have questions make sure to get help from a professional credit counselor that is government approved. They also can help you along the way to getting out of debt.


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Low Interest Student Loan Consolidation Options For College Graduates With College Debt

College students who have some form of student loan debt may benefit from a low interest student loan consolidation after they graduate. Many student loans often have a grace period in which a student is not required to pay on their loans. However, once student loans are required to be repaid many people find it difficult when they have multiple student loans and owe multiple monthly payments.

In this case some people benefit from a low interest student loan consolidation because it groups all of their student loan debt into one loan and one monthly payment. Some may also benefit because they get an affordable interest rate on this consolidation and and can more easily afford the monthly payments.

However, student loan consolidations may only be best for individuals who have multiple student loans or a large amount of student loan debt. Some student loans will not consolidate. For instance, a private student loan cannot be grouped in with a federal student loan consolidation. It’s for this reason that one should be sure the types of loans they have will consolidate before proceeding.

There are also many who feel that paying student debt off separately will cost less money since there are smaller amounts to be paid and they can be erased in a timelier manner than one large sum. This will be dependent upon a person’s individual situation, but it may benefit someone considering a student loan consolidation to calculate the total costs of a consolidation loan and pay their loans separately, when factoring in both the time of repayment and interest rates.

Anyone who is having trouble repaying their student loans may have other options outside of a student loan consolidation. Contacting your student loan lender will be the best bet when it comes to finding out if there are other forms of assistance available or if a consolidation loan will be best for you.



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Low Interest Student Loan Consolidation Can Help You Get Out Of Debt Faster

College graduates often have a variety of loans outstanding and while a few loans with decent interest rates may not seem like a problem, if you are not careful, those loans could start becoming a burden to your finances and hurt your credit score.  A low interest student loan consolidation may be the thing that can help you get rid of student loan debt faster.

Multiple loans from various lenders can be tough to handle.  If you have only one or two student loans under one or two interest rates, consolidation may not be best for you, but if you have multiple forms of student debt, and you don’t have much financial savvy, you may want to look into your options for low interest student loan consolidation.

If you do discover that consolidation is the best route for you there are a few things to be aware of.  First, certain types of loans will not consolidate, like federal, private or institutional loans.  Typically, if you have multiple federal loans and an institutional loan, you will not be able to consolidate these into one loan, so check to be sure you are able to group your debt under one roof.

For instance, if you have a student debt consolidation loan and one outstanding loan like a institutional loan, that can be manageable, but keep in mind the repayment period on your consolidation.  A low interest student loan consolidation loan may bring an affordable monthly payment, but it could cost you much more over the long run if you only pay minimal payments.

Making a budget and repayment plan of your own can save you interest and get you out of debt faster, so you may also want to look into paying more than your minimal requirement on your loan consolidation each month.


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Student Loan Debt Consolidation through the US Education Department

Difficult economic times have hit everyone including student loan borrowers. Students who have been forced to quit school before completing their degrees and graduating scholars are finding it difficult to locate good paying jobs—some are unable to find any type of work whatsoever. Additionally, companies have been laying off employees in the hopes of surviving a brutal economy. Because they have been laid off or are having difficulties locating jobs, individuals are finding themselves unable to repay loans. If you have student loan debt, you may find welcomed relief in student loan debt consolidation programs offered by the government.

Debt Consolidation Programs offered by the US Department of Education
Two debt consolidation programs offered by the US government are the Family Education Loan Program and the William D. Ford Direct Loan Program. These student loan debt consolidation programs offer you an opportunity to combine multiple student loans, extend repayment periods, lock in interest rates and reduce monthly payments; hence you are able to prevent defaults and avoid financial ruin. Through the consolidation programs, you may consolidate multiple student loans into one loan and extend your payment period between 10 and 25 years, depending on the option you selected.

Loan Consolidation Program Description
Funding for the Family Education Loan (FFEL) Program is provided by private lenders and the loan is guaranteed by the government. A guarantee by the government means that should you default on the loan, the federal government would repay the private lender. You would then be required to repay the government. Conversely, if you are participating in the William D. Ford Direct Loan Program you receive funding from the federal government. Interest rates on FFELs are 6% for undergraduate students and 6.8% for graduate students while interest rates on Direct Loans are 5%. In both programs, either you or your parents are eligible for these loans.


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LOW INTEREST RATE STUDENT LOAN CONSOLIDATION – SAVE MONEY TODAY

Do you have multiple student loans and need a way to consolidate them immediately? Chances are by consolidating your multiple loans into one you can eliminate high interest rates, and get the loans down to one big payment per month. This is often times the best choice for students.

Even though student loans typically already have low interest rates, if you get put into a situation where you have to take out several to pay for school- even with low rates the debt begins to build fast. For this reason, many companies offer debt consolidation much like they offer mortgage refinance in order to help the debtor pay off the debts quicker and more efficiently.

Consolidating debts allows the debtor to combine all the loans into one major loan. Many times people do this with credit cards in order to pay them off quicker and improve their credit score instead of letting the debt continue to accumulate, and build interest and hurt their credit score.

If you have an abundance of student debt, don’t waste time paying the minimum payment and spending years paying it off. Look into debt consolidation immediately, get a lower interest rate, and consolidate your debts into one large payment in order to save your credit score and get your debts paid off faster.

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Federal Student Debt Consolidation Loans For School and Colleage Student

Student debt consolidation services are a great method to streamline various debts into a single loan, and manage funds in a much more organized manner in cost-effective ways. Consolidation has several benefits including lower rate of interest, single and smaller monthly payment, hassle free payments, and longer repayment duration.

Most student loans come with variable interest rates, which change every 3 years or so, based on the terms and conditions. When a person decides to school debt consolidation loan , the interest rate becomes fixed, which is applicable throughout the loan repayment duration. So, your lifestyle will no more be dependent on market fluctuations that influence interest rates.

There is a long list of student loans that can be consolidated, including private and federal types.

• Unsubsidized Federal Stafford Loans

• Federal Supplemental Loans for Students (SLS)

• Health Professions Student Loans

• Subsidized Federal Stafford Loans

• All Federal Direct Student Loans (Direct Loans)

• Nursing Student Loans

• Federally Insured Student Loans (FISL)

• Federal Parent Loans for Undergraduate Students (PLUS)

• National Direct Student Loans (NDSL)

• Federal Perkins Loans • Health Education Assistance Loans (HEAL)

• Loan from the Department of Education

Federal loan consolidation and private student debt consolidation loan have their own benefits. It is advisable to not mix up the two. However, some student loan consolidation companies offer services that can combine the two types and yet give the same benefits. Any two or more of the above loans can be consolidated by DebtConsolidation123. We offer our services to students not just in the grace period of their loans, but also those who have completed their graduation.

Students with only private education loans should seriously consider private school loan consolidation offered by us. The benefits are manifold, and you can save thousands of dollars over the years. Our terms and conditions are very transparent.

So, you can see the benefits clearly.

• Fixed interest rates

• No registration fees

• No credit checks

• Loan duration extendable up to thirty years

• Reduce monthly installments by almost 50 percent

• U.S. government approved program

• Easy and simple application form, takes less than a minute to submit

Do now waste any more time. Time wasted is money wasted on unnecessary interest.

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Student Loan Debt Consolidation, Low Interest Rates Provide Opportunity For Lower Payments

Men and women who are decades removed from graduation are still paying off student loan debt and many are fighting to keep the interest on their student loan payments from extending the lifetime of their repayment history. If you need assistance with student loan debt consolidation, now may be an excellent time for you to look into various lenders and institutions that are offering record low interest rates on loans.

Student loan debt consolidation is most advantageous to individuals who have two or more student loans and are paying separate interest rates on those student loans. Student loan debt often comes from unsubsidized student loans, subsidized student loans, or a combination of both.

There is an infinite amount of student loan debt consolidation assets out there, so just look for the one that is right for you. Your best bet is to first look at one of the lenders that holds your current student loan and ask about student loan debt consolidation.

Locking in a low interest rate at the present time is going to be easy since interest rates are staying low, so finding an institution that will assist with your student loan debt consolidation, provide a lower interest payment, and bring down your overall monthly payment.

In these difficult economic times there is nothing worse then having bills rolling in with high costs and ridiculous interest rates. So look for your opportunity for student loan debt consolidation and ease the debt burden that always accompanies those student loans.


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Getting Out Of Student Loan Debt With Student Loan Consolidation

Many new graduates are finding the job market unwelcoming and are faced with student debt that seems to be insurmountable, but consolidating student loans may be the best way to get out from under a mountain of student loan debt.

Students are entering 2010 wondering how they will be able to pay for student loan debt and many have never considered student loan consolidation. Consolidating student loans can be an easy process if you seek out the right lender and student loan consolidation will make repayment of student loan debt much easier.

High interest rates or multiple interest rates are what generally causes trouble and prolongs the repayment process with the amount owed seeming to never shrink due to the interest. However, if you consolidate your student loan at the present, when interest rates are still relatively low, you will take multiple loans and interest rates and roll them into one payment with a fairly low rate.

Student loan debt doesn’t have to be carried around for decades and consolidating your student loan debt is an excellent way to assure that doesn’t happen since it provides a more affordable option.

Look for lenders who are reputable and willing to work with you, as well as, offer a low, fixed rate for your consolidation loan. There are both private and governmental lenders who are available and willing to help students with their loan consolidation.

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Improve Credit Score, Lower Interest Rates With Student Loan Debt Consolidation

Paying off debt is the easiest way to improve one’s credit score and for the newly graduated college student that can seem like a tall task with so much student loan debt facing them in the real world. However, student loan debt consolidation can help make payments more affordable, give you a lower interest rate and over time improve your credit score, which will benefit you in a number of ways in the future.

Most people have more than one student loan, various types, or loans from different lenders and each brings its own interest rate for each student loan. Student loan debt consolidation rolls all these into one payment with one interest rate, so paying bank those student loans will be easier.

If you establish a history of paying off a large loan it will improve your credit score and anyone who has student loan debt will tell you there are no small debts when it comes to student loans, since $20,000 is the very low end of debt for a college education.

So, look for credible lenders and credible companies that will work with you to consolidate your student loan debt. If there are hefty fees or fines associated with these lenders then just walk away and find another because there are institutions out there that will exploit a student looking to consolidate student loan debt.

Governmental lenders are always available, as well as private lenders, but make sure they have your interests in mind as well as theirs.


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A Plea to Add Consumer Protections to Student Loans

For years, the Department of Education, lenders, and even universities have been advertising low student loan default rates, typically in the 5-7 percent range. However, these rates have, until recently, only taken into account those loans that default in the fiscal year after the one in which the loans became payable. This window was recently extended by one year, but still does not capture a huge number of defaults.

In 2003, the inspector general for the Department of Education released a study in which it estimated that the true, lifetime default rates for 4-year, 2-year, and for-profit colleges were about 25 percent, 35 percent, and 45 percent, respectively. (An earlier version of this post incorrectly gave the last figure as 4 percent.) Simple averaging suggests that overall, about 1 in 3 student borrowers are defaulting on their student loans.

One would think that at least the Department of Education would take this information seriously, and see to it that students and their families knew these facts before taking out loans. However, this information is never referenced by anyone in power, and getting Department of Education officials to comment on this study has proven to be impossible. This has not changed with the new presidential administration, since most of the “old guard” still hold their posts in the Office of Federal Student Aid.


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