Debt Consolidation
Here are some
factors you should consider
when deciding if consolidation is
right for you.
Are your monthly payments
manageable? If you have trouble
meeting your monthly payments, have
exhausted your deferment and
forbearance options, and/or want to
avoid default, a Consolidation Loan
may help you.
Too many monthly payments driving
you crazy? If you send payments to
more than one lender every month,
and want the convenience of a single
monthly payment, consolidation may
be right for you. With a
Consolidation Loan, you will have a
single lender and a single monthly
payment.
What are the interest rates on your
loans? If you have variable interest
rates on loans, you may want to
consolidate. The rate of a
consolidation loan is often based on
the weighted average interest rate
of the loans being consolidated.
How much are you willing to pay over
the long term? Like a home mortgage
or a car loan, extending the years
of repayment increases the total
amount you have to repay.
How many payments do you have left
on your loans? If you are close to
paying off your loans, it may not be
worth the effort to consolidate or
extend your payments.
Source: the U.S. Department of Education
e-loan
Debt Consolidation
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Homeowners
Find the loan that saves you the
most money. You can borrow up to
125% of your property value.
Find the Best Loan Non-Homeowners
Personal loans are available that
provide you cash to consolidate your
debts.
Federal Student Aid
The Higher Education
Act (HEA) provides for a loan
consolidation program under both the
Federal Family Education Loan (FFEL)
Programs and the Direct Loan
Program. Under these programs, a
borrower’s loans are paid off and a
new consolidation loan is created.
These programs simplify loan
repayment by combining several types
of Federal education loans (that may
have different terms and repayment
schedules or may have been made by
different lenders) into one new
loan. The interest rate may be lower
than on one or more of the
underlying loans. In addition, the
monthly payment amount on a
consolidation loan is usually lower
and the amount of time to repay may
be extended beyond what was
available in the separate loan
programs. These features should
result in more manageable debt and
should make borrowers less prone to
default.
To qualify for Direct Consolidation
Loans, borrowers must have at least
one Direct or Federal Family
Education Loan (FFEL) Program loan
that is in grace, repayment,
deferment or default status. Loans
that are in an in-school status
cannot be included in a Direct
Consolidation Loan.
Borrowers can consolidate most
defaulted FFEL and Direct Loan
Program loans, if they make
satisfactory repayment arrangements
with the current loan holders or
agree to repay their new Direct
Consolidation Loan under the Income
Contingent Repayment Plan.
Borrowers who do not have Direct
Loans may be eligible for a Direct
Consolidation Loan if they include
at least one FFEL Loan and have been
unable to obtain a Federal
Consolidation Loan with a FFEL
consolidation lender or have been
unable to obtain a Federal
Consolidation Loan with
income-sensitive repayment terms
acceptable to them.