Notice: Undefined index: articledetail in /home/utils/securefiles/securecode/utl_article.cls.php on line 643 Consolidate Your Loans, Part 1 | EdFed.com
America's Top Student Loan Provider
Consolidate Your Loans, Part 1
The quickest, easiest way to get out of default is to consolidate your loans. Federal loan consolidation is not available for private, or so-called alternative loans, only for federal loans. There are two federal loan consolidation programs: FFEL consolidation and direct consolidation loans.
Under the consolidation process, your existing loans are paid off and a new loan takes it place. Millions of people consolidate their loans every year, and many of them do it simply to avoid the hassle writing multiple checks each month to a variety of lenders. Loan consolidation is convenient because all your loans get rolled up into one new, big loan and then you pay off that single debt.
As you might expect, though, consolidation has its price. Sure you might drop your payment from $700 a month to $250 a month through loan consolidation, but the catch is you'll wind up paying a lot more money in interest charges, and it'll take you far longer to get rid of your student loan debts. Still, if you need immediate relief this can be a worthwhile option to consider.
To get a loan consolidation after you've been in default, you must first show the government that you're ready, willing, and able to begin making regular payments. Under guidelines issued by the Department of Education, in order to receive an FFEL consolidation loan, you must get your defaulted loan back into repayment status. You can do this in only 90 days. Once you make just three on-time, full monthly payments in an amount that you and your lender agree upon, your defaulted loan is eligible for consolidation.
Under the terms of this program, a commercial lender then pays off your old student loan debt and issues you a new loan, along with a fresh promissory note, new interest rate, and an updated repayment schedule. Depending on how much you owe, the repayment period can be stretched out as much as 30 years.
After you've successfully made those three agreed-upon payments, your credit report is then updated, showing that your old loan has been paid off and now has a zero balance. Beware, however, that the old default notation will still remain on your credit report for seven years, and that doesn't look good to lenders. It's just that the default will be stated as paid in full.
Article Title : Consolidate Your Loans, Part 1
Comment not found for this article.
Share this story:
EdFed introduces… Awareness… Learnal
At, EdFed, we proudly introduce 'articles on student loans' and 'Learnal - the journal to learn from', our free newsletter on student loan management, which is sure to keep you informed of the latest events and happenings in the student loan market. To receive your copy of the above just use the RSS feed below and add this to your "My Yahoo", blogs, newstickers, and other similar channels accepting distributable content.
Click here to sign up for our Weekly Newswire now!
How EdFed Helped others!
Working toward graduation was hard enouph for me. When I heard about consolidation I thought it was just one more thing on my list of things to do. EdFed made it easy for me when I got some information in the mail. I called in and had my application filled in and signed in 15 minutes. That's less ime than it takes me to walk to class! - Ryan P. New York, NY
Student Loan Consolidation Info - How to Choose the Right Loan Company
The Career Resources column is presented by Granted, America's leading job search engine dedicated to getting people jobs.
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.
Our borrower-benefits package is designed to help you save by reducing your interest rate by 1.25%. Using auto-debit to make your monthly payments will ensure you make on-time payments and thus help you toward the goal of 36 on-time payments, guaranteeing you thousands of dollars in savings.