Want to Consolidate a Student Loan?
By Christopher Luck
Just finished school and now it's time to
start paying on those
Student loans fall into two categories.
1. A private student loan which was based
on your credit or that of your parents. Loans
of this nature may be consolidated through
standard loan consolidation.
2. Federally funded student loans were backed
by the federal government. You may have received
them from a private institution but if you
default on them the government guaranteed
the funding organization that it would make
the loan good. These loans have very strict
rules regarding consolidation.
If you want to consolidate a student
loan that was federally funded below are
some tips for doing so.
A federally funded student loanwill not
be discharged in a bankruptcy except in
circumstances of extreme hardship. Hardship
in this case may mean that you have no
money left at all after paying for essential
needs such as rent and food. Even people
on disability and public assistance are
often times found ineligible to have their
loans discharged.
In certain situations for short periods
after you have left school your student
loan may be subject to forbearance. During
this period of time you pay only the interest
on the loan. Forbearance is generally
allowed for a time period of thirty-six
months. Applying for student loan forbearance
is not an option if you have allowed you
loan to go into collection.
A private student loan should not be
and, in many cases, cannot be consolidated
with a federally funded student loan.
Once a private student loan is rolled
in with a federally funded loan, it becomes
subject to the same rules and restrictions
as the federally funded loan. If you have
both types of loans seek separate consolidation
services. A federally funded student loan
also cannot be consolidated with credit
card debt.
If you are considering consolidation
of your student loans, gathering the appropriate
information and acting quickly is well
advised. Grace periods apply to the ability
to consolidate your student loan. Once
the grace period has expired it is exceptionally
difficult if not impossible to consolidate
your loans.
The interest rate of the newly consolidated
student loan will be a weighted average
of all the loans which are within the
consolidation package. Currently there
is a cap of 8.25% on the new interest
rate. However, in the current environment
of escalating interest rates, this cap
may be raised. The potential for a higher
interest rate in the foreseeable future
is another good reason to think about
consolidating your student loans. Even
though the interest rate on your new student
loan may not be substantially lower than
the interest rates on your current loans
the period over which it is repaid may
be extended thus lowering your payment.
A student loan can only be consolidated
one time unless a newly funded loan is
included in the second package. Therefore,
it is extremely important to make sure
you include all of your current federally
funded loans in the first consolidation
loan.
A student
loan is a lifetime obligation if allowed
to go into default. Failure to make payments
is reported to credit agencies just like
any other debt. So, before your student
loan gets out of hand consider consolidating
your studnet loan today.
Christopher M. Luck has an extensive
professional background in working exclusively
with student loan consolidating and for
the first time ever, is now offering his
free loan consolidation secrets to the
public. If you are at all interested in
Christopher's advice, tips, or secrets,
you can visit his consolidation blog
Article Source: http://EzineArticles.com/?expert=Christopher_Luck
