Consolidate Federal Student Loan

Home mortgages aren’t the only loans with record low rates. Because of recent declines in rates for federal student loans, many post-graduated students are choosing to consolidate their loans, and enjoy lower payments. Although college and graduate students spend an estimated four to eight years in school, landing a high paying job immediately following graduation may not be the reality. With this said, many graduates seek ways to lower their overall costs. Consolidating a federal student loan is one such way.

What is a Student Loan Consolidation?

Student loan consolidations involve obtaining a single loan which combines all previous federal student loans. Federal student loan consolidation can be compared to a mortgage refinancing. Graduates who apply for a student loan consolidation will obtain a new loan, which replaces the old. Typically, a student loan consolidation loan has a fixed interest rate and term. The average term is approximately 10 to 30 years; however, student may select a shorter loan length.

Student Loan Repayment Terms

The terms for repaying a federal student loan consolidation will vary according to the loan amount. On average, student loans under $7500 have a repayment term of 10 years. Moreover, students who owe between $7500 and $10,000 have a 12 year loan term. Loan amounts ranging from $10,000 to $20,000 have an average repayment of 15 years. Loans that exceed this amount generally have a 20 to 30 year repayment term.

Are all Student Loans Eligible for Consolidation?

No. Unfortunately, non-federal student loans are not eligible for a federal student loan consolidation. Non-federal loans generally consist of loans received from banks, credit unions, or private lenders. Moreover, college tuition paid with a credit card cannot be included with the federal consolidation.

Is Consolidation Right for You?

If your current student loan has a comparably low rate, consolidating may not produce much savings. Rates for most student loans dispersed in the late 1990’s and early 2000’s were around 8 or 9 percent. Today, it is possible for a college graduate to consolidate and obtain a rate as low as 3 or 4 percent. A rate reduction of this sort will likely lower monthly payments by 50%, and save the student thousands of dollars throughout the duration of the loan.

Reasons to Consolidate Federal Student Loan

There are three primary reasons for obtaining a federal student loan consolidation.

� Lower Monthly Payment
� Single Monthly Payment
� Low, Fixed Interest Rate

How Many Times Can a Student Consolidate?

Each federal student loan can only be consolidated once. However, if a student applies for a new federal student loan after completing a consolidation, or an old loan was not included in the consolidation, this particular loan may be consolidated into a new student loan.

When to Consolidate Student Loans?

Student loans can be consolidated at any time. In fact, some students choose to consolidate for a fixed rate before graduating. The majority of college graduates select a consolidation before they began repaying the loan. This way, they are able to save money from the start. Nonetheless, graduates may apply for a consolidation even if they have already begun to repay the loan.

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