School Loan – Student Loan USA

Consolidate Student Loans? How…? 4 Reasons to Consolidate your Student Loans On or Before July 1st 2006 : Every year, student loan interest rates are reconfigured on July 1st.  In recent years, this date has come and gone with no cause for alarm, but this year is different.  As part of a plan to heal the nation’s $40 billion budget deficit, the Senate passed a plan to cut $12.7 billion from the federal student loan program between 2006 and 2011.  The impact on students is a drastic interest rate hike on all federal student loans including the Stafford loan, the PLUS loan, the Consolidation loan, and the Perkins loan.

4-Reasons-to-Consolidate-your-Student-Loans-On-or-Before-July-1st-2006

1. Student loan interest rate hike After July 1st, the interest rate on new Federal Stafford loans will jump from a variable 4.7 percent to a fixed 6.8 percent while PLUS loans will increase from a variable 6.1 percent to a fixed 8.5 percent.  The way to avoid these skyrocketing interest rates is to lock into today’s low fixed rate by consolidating your loans.

2. Last chance for “in school” consolidations?  Under the new legislation, students that are still in school won’t be able to consolidate their loans after July 1st, 2006.  It’s more important than ever for current students and those who are in their post-graduation grace period to seize this current window of opportunity to refinance and lock in the current rate before July 1st.

3. The 1st of July means the end of spousal consolidations.  Another student loan consolidating restriction will be imposed on the spousal consolidation loan.  For years, married couples have enjoyed the simplicity and financial benefits of consolidating their student loan payments.  Married couples still have the chance to take advantage of this opportunity by applying for a spousal consolidation loan before July 1st.

4. You’re stuck with your lender. Starting on July 1st, borrowers will no longer have the opportunity to consolidate existing Consolidation loans with a different lender.  Unless the current lender does not offer a consolidation loan with income sensitive repayment terms, borrowers won’t have any options when it comes to shopping around more attractive offers and companies.  Steps to take on or before July 1st If you haven’t already consolidated your student loans, contact a student loan consulting and refinancing lender as soon as possible.

Go online and compare various online loan companies, read up on loan terminology, use online calculators to understand your potential savings, and get in touch with a student loan consolidation expert with a list of questions.  Student loan consolidation already offers a wealth of benefits, not to mention the newest benefit as a safe haven from the July 1st interest rate hikes.  Because payments are combined and spread out over a longer period of time, monthly payments are reduced, freeing up cash flow for young adults who are just beginning their careers.  Additionally, having only one open loan is more beneficial in terms of credit rating as opposed to numerous open loans that can lower an overall FICO score. Refinancing before July 1st still gives students one last chance to lock in low interest rates and take advantage of other soo.

Should You Really Consolidate Student Loans? If you’re pondering whether or not to consolidate student loans, consider this; all college loans have unique attributes, and not all may be perfectly suited for student loan consolidation.  Student loan consolidation is, in most cases, an outstanding option for reducing monthly payments, locking in low rates, and earning opportunities to shave money off your loan balance with lender incentives.  When you consolidate student loans, you lock in the current interest rate by allowing the lender to repay the entire amount, then repaying the lender free from government interest rate fluctuations.
PLUS Loan – Good Choice for Student Loan Consolidation
Like many college loans, the PLUS loan (Parent Loan for Undergraduate Students) is a type of federal loan with a variable interest rate.  This means that the monthly payment will change when the government reconfigures the interest rates annually (July 1).  The interest rates on PLUS loans are generally higher than other types of college loans so when interest rates increase, PLUS loans can be greatly affected.  Since college loans are consolidated by social security number, parents should apply separately for PLUS loan consolidation.

Should You Really Consolidate Student Loans

Perkins Loan – Consider before refinancing
The Perkins loan is a fixed rate loan and has some unique benefits that can be lost with a student loan consolidation.  The Perkins loan has a forgiveness program that will waive all or part of the repayment amount if the borrower works in specific occupations that provide a valuable service to the community. Some such eligible occupations are teachers in low income areas, nurses, and medical technicians.  If you’re not eligible for the various loan forgiveness opportunities offered by the Perkins loan, there is still another point to consider.  Because the Perkins loan is a fixed rate loan, and because the interest rate on a student loan consolidation is determined by the weighted average of the other loans, you could actually pay a small percentage more on a consolidated Perkins loan over time.
Stafford Loans – Good Choice for Student Loan Consolidation
Stafford loans are the most common loans, and also the most popular type to consolidate.  Stafford loans have a variable interest rate like the PLUS loan, making refinancing a smart choice.  Loan consolidation can reduce the repayment amount by up to 63% if refinanced through the right lender.  Like the Perkins Loan, the Stafford Loan also offers a few forgiveness programs for those in certain teaching positions and other various public service jobs.  Check to see if you’re eligible for any forgiveness programs before applying to consolidate student loans.

Health Professions Student Loan (HPSL) – Consider before refinancing
The HPSL loan for medical professionals is a fixed rate loan like the Perkins Loan.  The HPSL comes with certain deferment options that may be lost after consolidation.  The HPSL offers a 3 year deferment period designed to give relief to medical professionals during residency.  This deferment option may or may not be lost after consolidation.  Those who have HPSL college loans should inquire with various lenders about deferment options.
Direct Loans – Good Choice for Student Loan Consolidation
Some schools offer Direct Loans, meaning that the money given to students comes directly from the federal government, not through a private lender.  Borrowers who obtain these college loans must first consolidate through the Direct Loan program, but then have the opportunity to shop around for lower interest rates.
Beginning July 1st 2006, borrowers will face much stricter regulations when consolidating Direct Loans.  After the 1st of July, borrowers will only be able to switch lenders if their current lender does not offer a student loan consolidation with an income sensitive repayment plan.  The two most popular types of loans are the Stafford Loan and the PLUS Loan which is the reason it’s so popular to consolidate student loans.  Many students acquire a variety of college loans that may not be beneficial to consolidate.  Student loans are not all created equal.  It’s important to understand the unique qualities of your individual loans and work with your lender to determine the option that is right for you.

July 1, 2006 is D-day for Federal Student Loans : Mark the date – if you have student loans or plan to take out student loans, major changes are in the works that will impact you on July 1, 2006.  Every July 1st, the Federal Government resets the interest rates on Federal student loans, but this year is different.  Not only will the rates on popular Stafford student loans increase from the current variable rate of 4.7% to a fixed 6.8% rate, but the government has enacted a handful of other laws that mean big changes for future and current students as well as students who have yet to consolidate their loans. Which student loans are affected? The student loans that will be affected are those that are part of the Federal .Student Loan program such as the Stafford Loan, the PLUS (Parent Loan for Undergraduate Students) loan, the Consolidation Loan, and the Perkins Loan.  Each loan type has a cap on the rate of interest that can be charged.  While not at their federally enforced cap, interest rates on student loans will hover dangerously close after July 1st, 2006.  PLUS loan rates will jump from a variable 6.1% interest rate to a much less attractive fixed rate of 8.5%, just half a point below the interest rate cap of 9%.  Why are student loan rates increasing?

July 1, 2006 is D-day for Federal Student Loans

The rate increase for student loans is part of the Senate’s $40 billion deficit reduction plan.  The largest single spending cut comes from; you guessed it, federal student loans.  With nearly 11 million students expected to take out $108 billion in federal student loans in the 2006-2007 school year, the impact has a dramatic effect on the nation’s budget.
How will higher federal student loan interest rates impact me? These changes won’t limit the number of loans that will be available.  Instead, those who do secure student loans to pay for education will pay back more money in interest over the lifetime of their loan.  Most students use federal loans to finance their education.  The rate hikes come at a time when students and parents are already struggling to adjust to the drastic increases in tuition and fees over the past ten years. How can I minimize the financial impact of these changes? If you’re out of school, consolidating your loans now will allow you to lock in the pre July 1st interest rates.  Those in school or in their post-graduation grace period can still take advantage of loan consolidation before the “in school” consolidation opportunity is eliminated by the new Senate bill.  Current and prospective students should be conscious of borrowing only what is needed to pay for school. Now is the time to consolidate student loans. If you have not consolidated your loans, now is the time to do it.  By refinancing before July 1st, 2006 you can lock in your repayment rates at historically low amounts while enjoying all of the other benefits of refinancing such as a lower monthly bill, a single monthly payment, and a more attractive credit score as a result of fewer open accounts.  Consolidation Options for Current Students. Until July 1st current students still have the option to lock in the lower interest . rates by consolidating their loans.  After July 1st, in-school consolidation won’t be an option any longer under the new law.  Students opting for an in-school consolidation before July 1st must waive the 6 month grace period following graduation, but will be locked in to today’s historically low interest rates throughout the lifetime of their loan.

What other changes are taking place?
Not all of the changes are bad, although they all involve higher interest payments.  Students can now take out PLUS loans for themselves as another option for financing graduate school.  Borrower fees will decrease across the board.  The current FFELP fee is set to be completely phased out by 2010 and Direct Loan fees will incrementally reduce from the current 4.0% to 1.0% by 2010. Where can I get help to ensure that I suffer the least amount of impact from these changes? The complete impact of these changes can be difficult to understand at best.  Student Loan specialist companies like ScholarPoint offer experts to talk with and access to online guidance, loan calculators, and information needed to potentially save thousands of dollars.  Those who are in the dark about the changes and fail to consolidate will unfortunately suddenly find themselves owing much more than they originally bargained for.  With a little insight and a few good strategic moves, you can save quite a bit of money by consolidating your student loans before July 1st 2006.