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Student Loan Consolidation - The Long and Short of Consolidation Plans
With tuition increasing at a rate greater than the cost of living, college students are depending more and more on student loans to help with the costs of higher education. Over the course of four or five years or longer in the case of graduate students, this adds up to many loans. Whether the loans are from the same lender or program or from different lenders and programs, most student loans can be consolidated under the Federal Direct Consolidation Loan. Consolidating your student loans can occur at any time after you take out your first student loan. The benefits, at least at the moment, are that you only pay one lender and there are several repayment plans to accommodate your financial situation.
Federal Student Loan Consolidation Plans
There are 4 consolidation loan repayment plans with fixed interest rates to choose from:
* Standard Repayment Plan:
The Standard repayment plan takes the shortest amount of time to repay. The interest is fixed and the monthly payments are fixed at a minimum of $50 for a maximum of 10 years.
* Extended Repayment Plan:
Under this plan the borrower pays fixed monthly payments that are less than the Standard plan. The repayment period can range anywhere from 12 to 30 years depending on the total amount borrowed. While the monthly payments are less, the total amount repaid is greater than the Standard plan because more interest accrues.
* Graduated Repayment Plan:
Another option that might work well for those who expect their income to increase gradually over time is the Graduated Repayment Plan. Rather than a fixed monthly payment for the duration of repayment, monthly payments increase every two years. Similar to the Extended plan, the repayment period varies from 12 to 30 years depending on the total amount borrowed
* Income Contingent Repayment Plan (ICR):
The Income Contingent Plan is more flexible than the other 3 plans because it considers the borrower's adjusted gross income, family size and the total amount borrowed when calculating monthly payments. The repayment period is a maximum of 25 years. Any unpaid portion of the loan at that time is discharged, but taxes must be paid on the discharged amount.
When choosing a plan, consider your financial situation and what it might look like in the future. Paying off your student loans sooner may be the best option for you, but you may have other financial considerations to make and need to keep more of your hard earned money for your current living expenses. Whatever the case may be, look at each plan carefully and consider how it will affect you now and in the future.
The author of this article runs OpinedMind.com and is currently a Ph.D. student writing articles on the issues of financing college and debt management based on personal experience and many hours of research.
More Useful Resource and Updates on student loan consolidation information
- S.C. Student Loan Corp. faces tight credit market (Charleston Regional Business Journal)
S.C. Student Loan Corp. received approval Sept. 23 from the state Budget and Control Board to issue $175 million in new bonds, but officials agreed even this highly rated issuer might find raising new money a tough sell amid the current financial crisis in New York.
- Federal student loan update (University News)
The economic state of the United States typically has a direct effect on a college's enrollment numbers. Approximately 10,000 students are paying for their tuition and fees with financial aid this semester, according to Jan Brandow, UMKC director of Financial Aid and Scholarships.
- Amid losses, student loan group says it's operating (Billings Gazette)
HELENA - Despite a tumultuous year in the national student loan industry and financial markets, the Montana Higher Education Student Assistance Corp. and its lending partners provided $45 million in loans to Montana students this fall.
- College strategies key as crunch hits loan market (The State)
With the credit crunch crimping the student loan market and financial market upheaval crunching investments in college savings plans, what?s a parent to do? That depends somewhat on when your child will need those college funds. If you?ve got a longtime horizon, some say investing in the tax-advantaged college-savings tools known as 529 plans still makes sense. Investors contribute after-tax ...
- College Financing Entity Says Education Lending to Continue (Flathead Beacon)
HELENA ? Montana college students received $45 million in education loans from the Montana Higher Education Student Assistance Corp. and its lending partners this fall, and the corporation says tumult in the student-loan industry will not prevent additional lending. MHESAC posted an operating loss of $8 million for the fiscal year that ended on June 30. Because of financial conditions ...
- College financing entity says tumult navigable (The Montana Standard)
HELENA (AP) ? Montana college students received $45 million in education loans from the Montana Higher Education Student Assistance Corp. and its lending partners this fall, and the corporation says tumult in the student-loan industry will not prevent additional lending.
- College of Medicine puts lender program, student scholarship funds on hold (The Ohio University Post)
Ohio University?s College of Osteopathic Medicine suspended its School as Lender program indefinitely, effectively cutting half of its scholarship funding.
- College student can't get a loan, questions goals (The Standard-Times)
Dear Annie: I am a 20-year-old college student who works full time. My biggest problem isn't that I have to work so hard. It's that it seems I'm the only one who needs to. Many of my classmates receive grants and financial aid that cover tuition, books...
- Sallie Mae Offers Tips, Tools for Successful Student Loan Repayment (Centre Daily Times)
Another important milestone is approaching for last spring's college graduates - at least those who took out student loans. As the end of the six-month, post-school student loan grace period approaches, Sallie Mae offers tips and tools to help newly minted alumni begin student loan repayment and build a healthy credit history.
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