College Consolidation Debt Loan

It is not uncommon for those enrolled in a college or university to obtain several student loans while earning their degree. Especially when attending graduate school, the number and dollar amount of these loans can be significant. In almost every instance where a student has multiple loans, a college loan debt consolidation may lower the collective interest rate and reduce the borrower’s overall monthly payment.

Loans that Qualify for Consolidation

Colleges and Universities have traditionally participated in two major loan programs as offered through the U. S Department of Education. These are the Federal Family Education Loan Program (FFEL) and the Federal Direct Student Loan Program (FDSLP).

Federal programs that are eligible for college consolidation loans include:

• Federal issued Perkins loans
• FFEL and FDSLP Stafford loans (subsidized and unsubsidized)
• Federal Insured Student Loan (FISL)
• Federal Consolidation loans (subsidized-unsubsidized)
• Federal and Direct PLUS loans (graduate and professional students, parents)
• Health Education Assistance Loans (HEAL)
• Federal Supplemental Loans for Students (SLS)
• Guaranteed Student Loans (GSL)
• Loans for Disadvantaged Students (LDS)
• National Direct Student Loans (NDSL)
• National Defense Student Loans (NDSL)

Loan Consolidation Options

It is important to recognize that college consolidation debt loans are rigidly structured. Interest rates are fixed by the federal government and do not vary by originator. The rate is calculated through the weighted average of the combined loans. The borrower must have graduated, and married borrowers cannot combine their debts.

The most popular payment options are:

• The Standard Repayment Plan: Includes a fixed monthly payment of at least $50, with a 10 year repayment maximum. These are the lowest interest rate loans offered.

• Extended Repayment Plan: Offers a fixed or graduated annual payment option over a term not to exceed 25 years. This loan requires a minimum of $30,000 in debts under a specific Stafford plan. The primary benefit is a lower monthly payment.

• Graduated Repayment Plan: This plan includes payment increases every two years and has a maximum repayment term of ten years. For those anticipating wage escalations, this may be an effective way to consolidate a college loan with extremely low initial payments.

• Income Based Repayment Plan: The flexible but capped monthly payment is designed to accommodate individual budgets and financial circumstances, and includes a 25 year repayment term

• Income Contingent Repayment Plan: For eligible FDSLP loans, the payment is recalculated on an annual basis to reflect a family’s changing adjusted gross income.

College Loan Consolidation Benefits

A college consolidation debt loan will usually result in a lower interest rate and monthly payment when compared to the cumulative total of the existing loans. There are a variety of flexible repayment plans that are designed to comfortably fit the needs of the borrower with terms up to 30 years. Unlike most private loans, federal student consolidation loans do not require a credit check, and there is no early repayment penalty.

The student consolidation loan process can be started at www.studentaid.gov.