10 Pointers on College Loan Consolidation

Should I consolidate my college loans or not?

1. Still in school, yes! Rates are low, but they're scheduled to go up. Your college loan payments will then remain as manageable as possible when you leave school. If you have graduated, or will be graduating this May or June, yes! Graduates can lock in historical low rates, and reduce their monthly payments more than half. You can lock in a rate even while still in school, and even if you have been out of school for a couple of years can get a good deal, too.

2. The newest twist in the consolidation puzzle is the "in school consolidation", affecting students who are currently enrolled and will be enrolled past the July 1 consolidation. You can consolidate your existing college loans now to secure the low rates for at least part of their student loan portfolio.

3. Consolidating could save thousands of dollars in interest payments on college loans. There are impending student loan rate changes and new interpretation of regulations by the Department of Education, also, Congress is considering ending the fixed-rate program. Experts are urging students to consolidate to relieve themselves of a higher debt load.

4. Many students and families are looking for a simple, clear answer about whether to consolidate college loans or not. The simple answer is to take some of the bite out of the debt by loan consolidation. You could live like a miser and save as much money as possible or consolidate your federal student loans now.

5. For students still in school, you have an opportunity to choose consolidation. Consolidating would put a college loan borrower into repayment status, but the student can defer payments until after graduation by making a deferment request. Consolidating today can have payments put off until graduation.

6. The federal loan program allows consolidation, which is when a borrower pools his student debts together so that only one monthly payment is necessary, rather than several. It's not just the convenience of one payment that is making consolidation so compelling. The most significant aspect of the program is that it allows a person to permanently lock in a lower interest rate on loans. These loans are backed by, or granted directly by, the federal government.

7. Rates for federal Stafford loans, the most prevalent type of student loan, as well as some other types of federal student loans are set annually based on the rate of 91-day U.S. Treasury bills at the end of May. The exact rate won't be known until the end of the month, but experts say it will be about 2 percentage points higher. (Private loans and federal loans cannot be consolidated together.)

8. For the first time, the U.S. Department of Education will allow students still in school to consolidate federally backed loans. Federal PLUS loans can also be consolidated. PLUS loans are used to help pay the cost higher education.

9. Students, regardless of enrollment, should absolutely consolidate their college loans, arranged through the student's lender. There are no fees, no credit checks, and interest rates are expected to move higher. Those are good reasons to consolidate.

10. Act quickly to put lock on current federal-aid interest rates. Graduates should act now to insulate themselves from a drastic rate change. Apply early. Do not wait until the last minute to file paperwork. Those who have already graduated or left school should not wait to investigate consolidation. In the first six months after graduation, you are in a grace period. Within that six-month window, you can lock in a low rate on Stafford loans and spread the repayment over as long as 30 years.

If you're going to consolidatePsychology Articles, now is the best time to do it.

Direct loans, the new way to fund going to college

Going to college can be an expensive proposition for both the student and the government.

Many people are finding that going to college is an impossible dream due to raising tutitions and cost of living unless they receive help in the form of a scholarship or loan. Of course the raising costs of everything are no reason that any bright child should not receive a higher education and achieve all they can aspire to.

In the past the federal government has had a lending program to assist people with funding their secondary education costs but this system has it draw backs. The old system of student loans was fraught with fraud, was time consuming and very confusing to most people. With the old system there was more than 7.000 lenders with 65 secondary markets and 35 guaranty agencies. For one loan most students would have to fill out countless forms and apply to numerous agencies until they finally got the answer they needed.

The other big problem with the old lending system was the cost of administrating the loans. On average it cost the government $11 per $100 loaned to manage the accounts. The solution to this is the simplified Direct Loan system that is now in place. The Direct Loan system is exactly what it sounds like; the government lends the money directly to you thus eliminating the middleman and much of the cost of lending money to students.

When applying for a Direct Loan you will have two options, a subsidized or unsubsidized loan. A subsidized loan is generally for people who would not normally be able to afford going to college at all. With a subsidized loan the government pays all the interest on the loan until your schooling is finished at which point you must begin to repay the loan. An unsubsidized loan is the standard Direct Loan for most people. With an unsubsidized loan you must pay interest on the loan while you are in school and then begin to repay the loan after you graduate. You do have the option of deferring the interest payments while you are in school. If you elect for this option the amount of the interest is added to the principal of the loan each month until you graduate.

Just like all other areas of finance in your life, you must also carefully control the Direct Loan financing. There are many things to keep in mind such as the yearly lending limits. For the first year you can only borrow $2,625, $3,500 the second year and $5,500 each year after that. This means you may also have to work or find other sources of funding while in school. Keep careful records of all the money you receive and keep receipts for everything you spend the money on. You might be surprised at what all can be used as a tax deduction.

As you can see Direct Loans are a fast and efficient way to receive college funding from the government. The application process has been reduced to basically one formHealth Fitness Articles, the time it takes to gain approval is faster and you receive your money sooner than before. Direct Loans are a welcome overhaul of the generally failing old system of student lending.