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Consolidating Student Loans - A Guide

BY Michael Simons

The Federal government created the student loan consolidation program to help students and their parents afford higher education, so that our youth is better educated and can achieve higher earning power. Like many government programs, however, some of the rules and procedures may be a bit complicated. Having had to help my own Son, I have created my own collection of resources at www.Consolidate-a-Student-Loan.com however the following guide may help others
Who Is Eligible
You are eligible if ALL the following are true: You have graduated, left school, or are currently attending school either full-time or less than half time, and your loans are in repayment, deferment/forbearance or in grace.
You have at least $10,000 in eligible student loans you wish to consolidate.
You can certify that you do not have a Federal Consolidation Loan application pending with another lender.
You must have an outstanding balance of $10,000 in eligible student loans to consolidate them under this program.
Which Loans Can Be Consolidated:
The following loans can be consolidated:
Federal and Federal Direct Stafford (subsidized and unsubsidized),
Federal and Federal Direct PLUS
SLS (Supplementary Loans for Students),
Federal Perkins,
Federal Nursing Student Loans (NSL),
Federal Health Education Assistance Loan (HEAL),
Federal Health Professional Student Loans (HPSL),
Health Professions Student Loans (HPSL),
Loans for Disadvantaged Students (LDS),
Federal Insured Students Loans (FISL),
Federal Consolidation Loans,
Federal Direct Consolidation Loans
Your Interest Rate:
Your new interest rate will be fixed, and is calculated by taking the weighted average of the rates on the loans you wish to consolidate, and rounding up to the nearest 1/8%25. In no case can your new interest rate exceed 8.25%25. For example, if you have only Stafford loans disbursed since 7/1/05, your new fixed interest rate would be between 4.70%25 (in grace) and 5.30%25 (in repayment). To qualify for a lower rate, sign up for direct debit (.25%25 off) and make your payments on your consolidation loan on time (1%25 off)
Repayment Options:
You may usually choose from the following repayment options:
Level Repayment Plan - your least expensive option. Payments are fixed over the life of the loan and repay all principal and interest due each month.
Graduated Repayment - can reduce your payments by more than 50%25 because you make small, interest-only payments at the beginning of repayment, and larger payments later on, when you may be in a better position to afford them. You may choose from the following graduated repayment plans:
2 Year Graduated Repayment Plan - Interest-only payments for the first two years, followed by level payments for the remainder of the term.
4 Year Graduated Repayment Plan - Interest-only payments for 2 years followed by 2 years of payments that include interest and a portion of principal, followed by level payments for the remainder of your term.
Extended Repayment - Extends repayment up to 25 years, if you have balance between $30,000 and $39,000 in eligible student loans.
If you wish to find out any further details, please feel free to visit my collection of resources and further information at www.Consolidate-a-Student-Loan.com

Michael Simons spent hours helping his own son consolidate his student loan, and has collected his own resources avilable at www.Consolidate-a-Student-Loan.com

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