January 18th, 2012 Posted by: George
It is easy to end up with a lot of student loans during your educational career. The combined payments can add up to more than you can afford. In these cases, federal student loan consolidation can be the answer. Government student loan consolidation offers the opportunity to take care of all of your student loans with a single payment. Often, this payment can be more easily managed with a payment amount reflecting the average interest rate of all the loans combined.
What are the Problems with Multiple Loan Payments
Having a plethora of student loan payments to make every month poses many problems. The major one is the aggregate cost of all of those payments. While each single payment can seem small, they can easily add up to more than you can afford. Another common issue is simple human forgetfulness. When you have a stack of bills to pay, it’s easy to overlook one or two. This can lead to costly late fees and even unintended defaults. Government student loan consolidation puts everything under one roof, so it is easy to know when you have paid the bill.
Another issue with having several loans is the multiple interest rates. Having several loans with different interest rates can make future debt elimination more challenging to predict. Federal student loan consolidation caps interest rates at 8.25 percent, but will assign an average rate for the applicant based on all of the loans to be consolidated. This can make it easier to pay off the loan in a timely manner, or restructure payments to reflect income based repayment.
What is a Government Student Loan Consolidation
Government student loan consolidation programs make themselves affordable in still another way. You can adjust the monthly payment amount by changing the life of the loan. By spreading payments out over a longer period of time, monthly payments are made smaller and more affordable. Of course, federal student loan consolidation programs have one thing in common with private ones: The longer it takes to pay off the loan, the longer interest has a chance to add up. It is usually best to pay off a loan as quickly as you can afford to.
Government student loan consolidation is available for all loans that are guaranteed by the U.S. federal government. Loans made by private lenders that are not federally guaranteed are not eligible for the federal student loan consolidation program. Primary care loans, law access loans, PLATO loans and medical assist loans are also ineligible. To consolidate these loans, try a private loan consolidation service like the EdSucceed Private Student Loan Consolidation program. This service can consolidate your federally-ineligible loans through their network of credit unions.