Consolidate school loan
Consolidation loans combine several student or parent loans into one bigger loan from a singer lender out of which is used to pay off the balances on the other loans. It is very similar to refinancing a mortgage. Consolidation loans are available for most federal loans including school loans, student loans and direct loans.
COST TO CONSOliDATION .
There will not be any fees for consolidation for school loans. However increase in interest rate on consolidation is inevitable.
Under any circumstances, you should not pay a fee in advance to get a federal education loan or to get consolidation of federal education loans. There will not be any fee to consolidate your loans. But for federal education loans, may charge some fees. The fees always deducted from disbursement check. And there is never an up front fee.
WHO CAN CONSOliDATE .
Both student and parent borrowers can consolidate their education loans. Student and parents cannot combine their loans through consolidation. Since only loans from the same borrowers can be consolidated. But they can consolidate their loans separately.
Student can only consolidate their education loans during the grace period or after the loans enter repayment. However loans which are in default but with satisfactory repayment arrangements ma be also be consolidated. Students can no longer consolidate whey they are still in school.
HINTS .
1) Consolidation of loan when in school: From July 1, 2006, the borrowers who are enrolled in school cannot consolidate loans that are in an in-school status. These are loans that have not entered or used up the 6 month grace period entitlement. However borrowers still can consolidate loans that are in grace, repayment or deferment. Borrowers can add loans to an existing consolidation for up to 180 days after the Direct Consolidation Loan was first disbursed. If more than 180 days has passed, borrowers can apply for a new Direct Consolidation Loan. The new consolidation loan can include the original Direct Consolidation Loan and must include another eligible outstanding Federal Education loan.
2) If once school loan is already consolidated there is way to enter into new consolidation loan. Once students loans consolidated there is no way to be unconsolidated but to pay the loans, and there will not be any reverse process.
3) Direct Consolidation Loans allow borrowers to combine one or more of their Federal education loans into a new loan that offers several advantages. With only one lender and one monthly bill, it is easier than ever for borrowers to manage their debt. Borrowers have only one lender, the U.S.Department of Education, for all loans included in a Direct Consolidation Loan.
4) Married students.
With effect from July,1 2006, a married couple may no longer obtain Direct Consolidation Loan as joint borrowers.
5) Interest rates.
The interest rate on a consolidation loan in the weighted average of the interest rates on the loans being consolidated rounded up to the nearest 1/8 of a percent and capped at 8.25%.
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