Using A College Federal Student Loan To Fund Your Education

It is possible to pay for college with a federal student loan. This is usually referred to as post-secondary financing option.

Applying for a Federal Student Loan for College is quite simple providing you follow the instructions on the application form.

The federal student loan program helps college students and their parents meet the cost of pursuing higher education. The first thing a student (or prospective student) needs to do is to fill out a FAFSA (Free Application for Federal Student Aid) form. It is available online or from the Financial Aid Office at post-secondary institutions.

The application is free and a student will not qualify for a federal student loan for college unless this application has been submitted. Within 30 days after submitting the FAFSA application, the student will receive a Student Aid Report (SAR) in the mail. A copy of the SAR is sent to the school the student is planning on attending.

Within two weeks after the SAR is received, the student will receive a letter from the Financial Aid Office of the school he or she is planning on attending. This letter will state how much financial aid the student will receive and how this financial assistance will be structured.

The award letter will indicate whether or not the student has been awarded the Stafford Federal Student Loan for college. If the Stafford Loan has been awarded, the student must fill out an application form in order to get the required promissory note. The student then signs the promissory note in order to receive the loan proceeds.

Once the promissory note is signed, it must be mailed to the office listed on the application form. It is a good idea to keep a copy of the promissory note for your own records. Stafford Loan recipients need to keep in mind that the funding offered is for one year only. A new FAFSA and loan application must be submitted each year.

If a student was not awarded a Stafford Student Loan, alternative sources of financing for college are available. It is possible to get financing for post-secondary studies from private sources. In the case of a person who gets approval for a Federal Student Loan for college but the amount of the loan is short of the amount of funding needed, this is a viable option. A private student loan center will be able to provide assistance to those people looking for alternate sources of financing for post-secondary education.

Consolidate Federal Student Loans

When the need for a student loan arises due to the peak of financial challenges in your college years, you can usually can find the funding you need. In many cases a student will have to apply for more than one student loan before reaching graduation. Even if you happen to acquire several student loans, there is no need to panic as graduation nears. Remember that you still have the option to consolidate those loans.

There are basically two major types of student loans. First is the federal student loan which is guaranteed by the US Government through the US Department of Education. They have implemented a Federal Student Aid program as a part of their campaign to provide equal education opportunity for all aspiring college students in the country. Federal student loans are not considered direct loans to the student from the US Government. However the loans are provided by the US Department of Education and a loan servicing institution, When you need to consolidate federal student loans you have the opportunity apply for single loan to accomplish the needed consolidation. One example of federal loans used to make a loan consolidation is a Stafford loan.

As an alternative you can use private sources consolidate your student loans. Private student loans, on the other hand, are administered by privately owned lending institution. Some of the most well known private lending partners are also the leading financial institutions such as Citibank, Chase and Sallie Mae. In general private student loan rates are higher than public sector loans. However there may be more benefits in terms of payment schedules, payment deferments and longer loan repayment schedules.

For those who have incurred a number of federal student loans, the problems of managing the loans can be a problem for some people. As a result many wise student borrowers may opt to consolidate federal student loans in order to better manage their finances and save money.

Once a student has decided to consolidate their federal student loans, there are conditions that must be before they can qualify. First is that they should have more than one federal student loan. Next is that students should be in good standing with each of their existing loan accounts. This means they are either in their six-month grace period or they have already made three monthly repayments for each of the existing loans.

Under the wing of a federal student loan, there are also distinct differences between a subsidized and unsubsidized federal student loan. Although they can still be merged into one loan account, iIt is important to know the type of loans you have before you apply to consolidate your federal student loans.

It is obviously very important for the student to do their research prior to applying to consolidate their student loans. Only then will the student be able to make an informed decision. In many cases a student loan consolidation will save you money and reduce the stress of student loan repayment. Federal student loan consolidation is a wise investment in the future.

What you Need to Know About Consolidating your Federal Student Loans

So you’ve graduated from college, and after the relief and the celebrations, the realization of your adult responsibilities may be starting to set in: the job search, rent payments, utility bills. And now here’s another one: All those federal student loans that made your college years financially possible may be coming up for repayment soon. As grace periods end, whether you and your parents face just one student loan or multiple student loan balances, payments and payment dates, Federal Consolidation Loans can help simplify your repayment options and may lower your monthly loan payment obligations.

NextStudent, a leading Phoenix-based education funding company, features Federal Consolidation Loans, available to both parents and graduates, that offer all the benefits of federal student loan consolidation along with NextStudent rate reduction incentives that reward responsible repayment.

Federal Student Loan Consolidation Eligibility

In order to be eligible for student loan consolidation, a borrower’s federal student loans must be in one of the following:

Grace period

Authorized deferment
Forbearance
Repayment

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Federal student loans that are delinquent or in default cannot be consolidated through NextStudent.

In addition, students consolidating their own federal student loans can only be attending school less than half time. But, parents: You can consolidate the PLUS loans you took out for your children’s education as soon as they’ve been fully disbursed and have entered repayment, even if your children are still in school.

However, parents’ PLUS loans can’t be consolidated with children’s Stafford loans.

Understanding Your Federal Student Loan Consolidation Rate

The interest rate for your Federal Consolidation Loan will be a fixed rate and will be based on the weighted average of the interest rates on the student loans being consolidated. In a weighted average, the larger the loan being consolidated, the more the interest rate is factored into the average.

The weighted average is then rounded up to the nearest 0.125%, with a maximum interest rate of 8.25%. This will be your fixed interest rate on your Federal Consolidation Loan.

The Benefits of Federal Student Loan Consolidation

The thought of repaying thousands of dollars of student loan debt can be overwhelming, especially when you have multiple student loans with several different lenders or servicers. Besides the convenience of combining all your existing federal education loans into one single loan with one monthly payment, a Federal Consolidation Loan offers several other benefits:

A fixed interest rate—no more worries about variable interest rates going higher and leaving you guessing about your monthly payment amount
Interest rate capped at 8.25%
No prepayment penalties—you won’t be charged for paying off your consolidation loan early
No credit check and no application fees

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Consolidation loans are also often repaid over longer periods (15–30 years), which may lower your monthly payments by up to 60%.

Rate-Reduction Advantages with NextStudent

Besides all the benefits of federal student loan consolidation, a Federal Consolidation Loan with NextStudent features additional benefits you won’t find with many other lenders:

We’ll reduce your rate by 0.25% right off the bat if you sign up for our automatic payment plan to have your loan payments automatically debited from your savings or checking account. No stamps, no hassle, no having to remember to make your payments every month, AND you lower your monthly payment—make your life more convenient and get rewarded for doing it.

We’ll reduce your rate by 1% after you make 36 on-time payments—and lock that rate reduction for the life of the loan, even if you miss a payment later on down the road.

We know repayment can seem overwhelming now, especially if you’ve just graduated. NextStudent can help. A Federal Consolidation Loan with NextStudent could help you simplify your finances, may lower your total monthly payment, and may give you a little more time to pay back your student loans—the breathing room you need as you navigate that transition between college and the real world.

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NextStudent believes that getting an education is the best investment you can make, and we are dedicated to helping you pursue your education dreams by making college funding simple. Learn more about Student Loans, Private Student Loans and Student Loan Consolidation at NextStudent.com.

Dealing With Student Debt in America – Federal Student Loan Consolidation and Other Tales

Philip Jones, a graduate of Rutgers University had experienced trouble with the repayment of his loans. According to Jones:

”My wallet was being pulled in too many directions; I was trying to pay for a house, a wedding, and a honeymoon within a six-month period.”

After remedying his situation (by asking for debt forbearance), he had an easier time of it: “I didn’t have to make a payment for six months, so that money went toward the wedding and honeymoon. It’s easing the financial stress.”

Heard it Before?

Jones’s story is not uncommon. In fact, this is the reason why people apply for federal student loan consolidation. Consolidation allows people to combine all existing educational loans into a single loan that that can be paid on a monthly basis. Bills and calls will cease, and monthly incomes can be controlled more.

A federal student loan consolidation can be used to end financial worries. According to the rules of federal government, there are is no “maximum” number of loans that can be applied for consolidation. It is also possible for an individual to ask for consolidation for a single loan, so that loan’s grace period can be extended to fit the financial situation of the person.

Computing Interest

It’s easy to determine the interest rate for a federal student loan consolidation. It is the weighted average interest-rate of all loans that have been submitted for consolidation. As a rule of thumb, the interest rate of a federal consolidation will not go beyond 8.25%. If it does you’re not dealing with federal consolidation. You’re dealing with a private consolidation company masquerading as being part of the federal government.

Reductions

Another interesting fact about federal student loan consolidation is you can ask about interest rate reductions. The basic function of a debt negotiation or a debt consolidation is to reduce the monthly pay-out. It is very possible to reduce your current interest rate by .6%, if you can pay within the given and pre-approved grace period.

For automatic debit payments, you can be assured of an interest rate reduction of about .25%. This encourages individuals to create separate accounts for the purpose of repaying debt. This also fosters a more genuine attitude for repaying debt.

On repaying Debt

According to Erin Korsvall, a spokesperson for Sallie Mae:

”There are a number of different repayment options to help you manage your monthly payments. Each situation would apply for borrowers who are in a position where they need to minimize their monthly payments.”

”Perhaps they are a recent graduate who has just entered the work force. Make sure they (lenders) have your current address. You don’t want to miss the bills. Pay on time as well. Sallie Mae offers an interest rate discount when you pay on time. There are no pre-payment penalties.”

If you are unable to repay any kind of debt for a particular month, make sure that you alert the lending institution. Do this and you’ll be able to avoid default and complicated lawsuits from lending institutions. There are laws in place that protect consumers as well as lenders from non-repayment of debts.

Federal Student Loan Information

The federal student loan program according to available federal student loan information is also known as the Direct Loan program that is in fact a low interest loan for students as well as parents that need some help in paying off the higher education costs of their student-children. According to available federal student loan information, the federal student loan is issued directly by the United States Department of Education to the student and so no other banks are involved when students apply for such a loan.

Direct Loan

Since the Direct Loan is available directly from the federal government the student must administer the entire process on their own which is possible, according to available federal student loan information, by making full use of the Direct Loan Servicing Center which is especially useful when you as a student intend on taking more than one loan and from a number of different schools.

Furthermore, according to available federal student loan information, you will also have quite a number of choices in regard to type of loan that is available under the Direct Loan Program and it is also important to have the required federal student loan information to help you learn about important differences between different kinds of loans and their individual applicable interest rates.

For example, if you check available federal student loan information you will also learn to differentiate between a subsidized, unsubsidized and Plus loan as well as the Consolidation loan. It pays to get as much federal student loan information regarding each of these different kinds of loans; for example, the subsidized loan is available to students that have certain financial requirements as recognized under existing federal regulations. Such a loan does not require the borrowing-student to pay any kind of interest as long as the student is enrolled in school for more than half-time attendance.

The unsubsidized loan is not given because the student has any kind of financial needs of the student but it is a loan in which the student has to pay interest on the loan and this interest is also charged during the grace period.

The Plus loan is really an unsubsidized loan for parents of a student and is meant to help in covering the educational costs that are not provided for through other forms of financial help. This loan, according to available federal student loan information comes with attendant interest that is charged

Finally, there is the Consolidation loan that is a combination of different eligible student loans (federal) that are consolidated into a single Direct Consolidation Loan. The main advantage to this kind of loan is that it invites lower monthly payments and this is possible because the repayment of the loan is spread over a longer period of time. However, this also means paying more interest because you are paying over a longer period of time.

Direct student loan refers to a type of student loan that is provided to the student or to the parents of students by the government directly without needing to use an intermediary lender. This kind of loan can be used for paying for both undergraduate and graduate education and also for certain kinds of vocational education.