Federal Loan Consolidation

Federal loan consolidation allows you to consolidate your outstanding federal education loans into a single new loan, even if your loans are currently held by more than one lender and are of different loan types. By consolidating your student loans, you can significantly lower your monthly payments by lengthening the term of your loans and locking in a low fixed interest rate. Most importantly, you can save thousands of dollars during the entire repayment term.

Additional Federal Loan Consolidation Benefits:

• Fixed rates as low as 6.75%
• Extended repayment term with lower monthly payments
• No fees
• No credit checks
• No prepayment penalties
• Seven flexible repayment plans
• Turn several monthly payments into one
• Deferment and forbearance available
  

Fixed rates as low as 6.75%. By locking in the current low rates, you can lock in a fixed rate as low as 6.75%!. Extended repayment term with lower monthly payments. By consolidating your loans you can extend your repayment term up to 30 years, depending upon your loan balance. This has the added benefit of lowering your monthly payments, so you are left with more money in your pocket each month.

No fees. There are no fees or costs whatsoever for a federal loan consolidation with EdFed.

No credit checks. There are no credit checks whatsoever for a federal loan consolidation with EdFed. As a matter of fact, consolidating your loans can actually improve your credit rating, as a result of having lower monthly payments. This can actually make it easier for you to qualify for mortgages and other major loans.

No prepayment penalties. Although you have the option of extending your repayment term, you will not be charged any fees or penalties for paying off your loans early. This means that if you take advantage of the low consolidation interest rates, you can save thousands even if you pay down your loan early.

Seven flexible repayment plans. EdFed offers seven different repayment plans for your consolidation loans, giving you extreme flexibility for your repayment. We offer the following plans.

Equal Payments: This option provides equal monthly payments over the term of the loan.

Select 2/Graduated Payments: This option allows for interest-only payments for the first 2 years of repayment. In the third year, payments increase to level installments of principal and interest payments for the remaining term of the loan.

Select 5/Graduated Payments: This option allows for interest-only payments for the first 2 years of repayment. In the third through fifth years, payments increase to include a portion of principal. In the sixth year, payments increase to level installments of principal and interest payments for the remaining term of the loan.

Income-Sensitive Payments: This option provides for payments to be adjusted annually, based on your expected total monthly gross income from employment and all other sources. Your account will initially be disbursed at the Select 2/Graduated repayment plan. After the consolidation loan is disbursed, you must contact your servicer to qualify. Once eligibility is determined, your servicer will calculate your new payment.

Extended Equal Payments: This option allows up to a 25-year repayment term of equal payments.

Extended Select 2 Payments: This option allows up to a 25-year repayment term with the Select 2/Graduated Payment plan.

Extended Select 5 Payments: This option allows up to a 25-year repayment term with the Select 5/Graduated Payment plan. All extended repayment plans are for qualified borrowers with more than $30,000 in eligible loans. Applicants interested in any of the extended repayment plans should contact one of our counselors to determine eligibility.

Combine several monthly payments into one. If you are currently making payments to more than one lender, consolidating your loans allows you to eliminate the complications of having to make multiple payments. Instead, you can combine those payments into one easy monthly payment.

Deferment and forbearance available. Loan consolidation with EdFed is done through the federal loan consolidation program, and thus you retain government benefits such as deferment and forbearance. Like your current federal loans, federal loan consolidations are guaranteed and insured by the federal government. A deferment is a temporary suspension of loan payments for specific situations such as reenrollment in school, unemployment (up to 3 years only), or economic hardship (up to 3 years only). Forbearance is a temporary postponement or reduction of the payments on your consolidation loan for a period of time due to financial difficulty.

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Student Loan Consolidation Program

Loan Consolidation Program all of student debts into one loan can either be a great idea saving student money, or the opposite in that it costs student more money and stress. Debt consolidation is getting one loan, at a lower interest rate, and paying off all of student debts with this one loan. Often people will get a personal loan which will generally have a lower interest rate than the rate student pay on student credit cards. They have more strict repayment plans, whereas on student credit cards, student decide on student repayments providing student pay at least the minimum, which is usually quite low.

Loan Consolidation have mixed views on whether debt consolidation works or not. It can definitely save student money due to the lower interest rate student pay, but in my experience it just moves the issue sideways for many people. By that I mean they consolidate all their debts into one personal loan, but then go and put more money on their credit cards.

If student are going to loan consolidate, student need to be totally committed to paying off student debts and have a plan in place to do so. Follow the steps in the previous two chapters to ensure student get a good result from consolidating student debts.

What about using student mortgage to pay off debts?

If student have enough equity in student mortgage to do so it can be a good idea. Mortgage interest rates are let's say between 7-10%; this is a lot lower than student would get a personal loan for. However the key thing student need to bear in mind is that student mortgage is usually over a 25-, or more commonly 30-year period. So even though the interest rate is lower student will pay more because student will pay student debt off over a longer period of time.

So as student can see, consolidating student debts into student mortgage can lower student interest rate and payments but because student will typically pay over a much longer period in the end student pay back a lot more in interest. This is what I mean by moving the problem sideways. It gives student a reprieve in student payments but in the end it costs student a lot more.

If student are disciplined with student money (one has to wonder if student are, otherwise student may not be in the situation of having too much debt) and do decide to consolidate student debts, make sure student stick to student plan and pay off student debts. If student do and stay away from the shops and getting into more debt - absolutely yes, student can save money. Just be honest with studentself and aware of what student are doing.

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