Do you ever think that you cannot afford consolidation? Do you ever think that you cannot consolidate because your loans are in deferment? If you do, then you are the victim of some widespread myths about consolidation. This article reveals the main misconceptions that many people have regarding consolidation, and it sets the record straight.
Myth: I already have a low interest rate, so there is no reason to consolidate.
Fact: Although you may think you have a low interest rate now, the interest rate on your loans may actually be costing you thousands of dollars more than is necessary. For example, the interest rate on your Stafford loans could have risen to around 8 percent without your being aware of it. Consolidating your federal student loans using borrower benefits is the only way to reduce interest rates on your loans once they've risen. EdFed's consolidation specialists can tell you in a few minutes exactly how much your loans are costing you and how much you stand to lose or save by consolidating with a 1.25-percent rate reduction.
Myth: I can't afford to consolidate.
Fact: With the new, higher interest rates on your federal student loans, you must consolidate now to avoid paying thousands of dollars in unnecessary interest payments. You can do this through our payment incentives, reducing your fixed interest rate by an additional 1.25 percent. If you have never consolidated, completing a consolidation may reduce your monthly payments by almost 50 percent. Given that the significant rate increases will cost you thousands of dollars in unnecessary interest, you can't afford not to consolidate right now! Additionally, there are no fees or income verifications required for consolidating.
Myth: My credit is not good enough to be approved for a consolidation.
Fact: There are no credit checks required for federal loan consolidations. The only requirement is that you have at least $7,500 in eligible loans and not be in default with your current lenders.
Myth: Consolidating will not benefit me, because I plan to pay off my loans early.
Fact: Remember that interest rates have risen by nearly 2 percent! Even if you are planning to pay off your loan within a few years, why pay more interest during that time? You could end up paying hundreds more each month than you need to. By consolidating now and reducing your interest rates, you will receive thousands of dollars of savings; and if you choose to pay off your loans early, there are no early pay-off penalties. If your plans change and you are not able to pay off your loan early, you will save thousands more by having locked in interest-rate reduction rather than allowing your interest rate to stay at a record high for several years.
Myth: I do not have time to consolidate.
Fact: Completing a consolidation application with EdFed usually takes about five minutes and can be done entirely online, including your E-Signature. Your loan specialist will do most of the work for you. You will not need to have your loan information, interest rates, or balances to complete an application. All you will need is some basic personal information and the names, addresses, and phone numbers of two references. Once you complete your e-signature, the consolidation process will begin immediately.
Myth: I cannot consolidate while my loans are in deferment.
Fact: Even though your loans are currently in deferment, we can consolidate them. Once we complete the consolidation, you will be able to reapply for forbearance or deferment if your financial situation has not improved.
Myth: I should not consolidate because I currently have an income-contingent payment plan.
Fact: EdFed offers a variety of flexible repayment plans. In addition to our equal repayment plan (paying principal and interest throughout your loan term), we offer graduated repayment options. Our Select 2 repayment plan allows you to pay interest only for the first two years of your consolidation. After the first two years, you will begin paying level payments of principal and interest for the remainder of your loan term. With our Select 5 repayment plan, you will pay interest only for the first two years, then some principal and interest for the next three years, and then level payments of principal and interest for the remainder of your loan term. In addition, you may apply for an income-sensitive repayment plan to help you through times of hardship. With rates increasing and tens of thousands of dollars at stake, finding the right repayment plan is no obstacle to loan consolidation.
Article Title : Consolidation Myths
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Education is one of the most basic right of any human, but with the increase in prices and the costs involved in education this has made these rights turn into a privilege which very few can enjoy. Any normal person today in the whole of United States has to take an education loan at one point of time to pay for their education fees.