The Advantages of Federal Student Loan Consolidation by Alok25852


The Advantages of Federal Student Loan Consolidation

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									If you've been wondering lately "What is loan consolidation?" then you are in luck, because education loans are

about to get a whole lot easier to pay off.

President Obama student loan proposals are now impacting college debt consolidation and federal loan

repayment for millions of college graduates.

However, while the advantages of federal student loan consolidation are plentiful, so are the pitfalls. It is

important for federal student aid borrowers to understand the risks and rewards when they need to consolidate

their educational loan.

Advantage #1 - You will save time and money. No fees, simple paperwork process. No refinancing decisions

based on your credit rating. The new program is reportedly available only from Jan. 2012 through June 2012 will

also be offering a slight deduction for selecting the automatic debit option in repaying your loan. This not only

helps you make timely payments, but it also helps reduce the amount of interest you'll be charged over the life of

your federal direct loan.

Advantage #2 - You may improve your credit score by avoiding default. Consolidating education loan debt

could be the ticket to staying current and not defaulting on your financial obligations. These types of loans cannot

currently be discharged for dismissed (except for loan forgiveness programs); not bankruptcy, not by hope and

prayer. Not by ignoring the threatening collection agent letters. These loans must be repaid! So by consolidating,

getting a smaller monthly loan payment, and sticking to a repayment schedule consistently, over time you will pay

off your debt. Federal student loan consolidation then gives you a path to resolving your financial problems

related to college debt.

Advantage #3 - You will avoid frustration by only having one bill to pay each month. Having to keep track

of 2 or 3 different bills each and every month can seem daunting; so, by consolidating into a new federal loan

consolidation program, you will not only lower your monthly bills. You'll also lower the number of checks you will

have to write and mail each month!

College was worth the price of admission. Your college degree opens many new doors to career advancement

now and in the future. But now, repayment of those college loans looms large. And the new federal student loan

consolidation program available for only six months by the U.S. Department of Education (Jan. 2012 - June

2012), could be the winning ticket to taking advantage of direct loan consolidation.

There are also disadvantages lurking around the edges of the new federal and private student loan consolidation

programs: Some consolidation programs make you ineligible to get your loans forgiven if you later enter a

qualifying career. Some federal loan consolidation programs exempt certain types of loans, and loans that were

taken out at an earlier time period. Oftentimes, old loans carry a lower interest rate, so consolidating those at a

higher level of interest makes no sense. Remember to compare options; your student loan consolidation rates

should at the very least be better than you can get from a private federal loan consolidation program.
But the U.S. Government's Dept. of Education website now offers a variety of loan calculators aimed at helping

college graduates have access to online tools aiming to help them compare loan consolidation packages and

help them determine the best way for them to pay off college expenses.

The official website is undergoing a number of updates after President Obama's student loan forgiveness

plans came to light in the media. By providing comprehensive details on various ways to finance a college

education, this website will ultimately offer yet another advantage to those seeking federal student loan


While paying off these loans may never be easy, making the sacrifice and the commitment now to honor your

loan commitments will pay off in other ways: You will earn the satisfaction of having followed through with one of

your major financial commitments you made early in your adult life. And, you will demonstrate to yourself and to

future creditors that you are an excellent credit risk.

Therefore, the advantages of federal student loan consolidation are obviously a goal you'll want to consider as

you dig yourself out of debt.

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