Posts Tagged ‘Federal Student Loan’
December 21st, 2009
One of the great things about student loans, and consolidated student loans in particular, is the low interest rate. By consolidating your loans you sometimes see a drop in the interest rate by 1-2%. It seems small and insignificant, but if you follow the tips from this article you can actually turn that reduction into profits.
As mentioned above, consolidated loans typically provide you with a lower interest rate than unconsolidated loans. They also offer repayment plans that can extend for up to 30 years. If you are a disciplined person who has a little bit extra money, you can use the money you save on payments each month to earn you cash.
Here’s how it works. When you consolidate, your payments are usually lowered, which means there’s extra money between what you used to pay each month and your new minimum payment. Instead of taking that extra money and spending it on impulse purchases and fun, it would be a good idea to use it to pay off extra principle on your loan. This can drastically cut down on the length of your loan, meaning you’ll pay less in interest. Not a bad idea. But it will only save you money, not earn it.
In order to earn extra money from your consolidated student loans you’ll need to take that extra money each month and invest it into a money market fund that has historically earned more than your current interest rate. For example, if your consolidated interest rate is 6.5%, you’ll want to find a mutual fund that has consistently returned 10-12% or more. Then you’ll earn 4-5% on your extra money every year. And here’s the best part: doing it now will allow compound interest to kick in, so after the life of the loan you’ll have a nice nest egg of profits from the money you were expecting to spend every month anyway.
And that’s not all! Federal student loan interest is tax deductible. So you’ll be able to claim the interest you pay on those loans every year, saving you even more money.
Keep in mind that while all this sounds great, there are risks involved. Although over time the stock market has been stable, there is a small chance you could lose your investment or make less in returns than you’re paying in loan interest. For these reasons it’s best to seek professional consultation before making any sort of investment.
With that said, this method is considered low risk and should at least be contemplated if you’re fortunate enough to have some extra money each month.
Visit School Loans Consolidation Guide for more student loan advice such as facts about your federal school loan and information on how educational loan consolidation works.
By: RJ Licata
December 21st, 2009
The Federal Student Loan Consolidation Program offers numerous benefits including locked-in interest rates that may save borrowers thousands of dollars and may cut monthly payments by up to 60 percent. NextStudent, the Phoenix-based premier education funding company, takes those incentives one step further by offering students a .6 percent discount if they consolidate their student loans during the six month grace period after graduation.
More Student Loan Consolidation Benefits from NextStudent
The interest rates for federal consolidation loans are set by the federal government, so the only true difference that individual companies can offer on their student loans are their incentive or discount packages. NextStudent offers substantial discounts both in the form of the .6 percent “New Grad” discount and additional incentive packages.
Borrowers have the option of choosing from three benefits packages. These packages include the “Standard Locked” package which offers a .25 percent discount when the borrower opts to pay via Auto-Debit and a 1 percent LOCKED RATE reduction after 36 consecutive on-time payments; the “2 %” package which offers a .25 percent discount when the borrower opts to pay via Auto-Debit and 2 percent rate reduction after 36 consecutive on-time payments (not locked); and the “Google” package which offers a .25 percent discount when borrower opts to pay via Auto-Debit, .375 percent discount after six months of on-time payments and the 1 percent discount after 36 consecutive on-time payments (not locked).
Qualifying for Federal Student Loan Consolidation
There are numerous advantages to student loan consolidation with NextStudent, regardless of which incentive package a borrower chooses. Qualification is simple with NextStudent’s “4-step easy e-app.” There are no credit checks, fees, or co-signers required. However, borrowers must have a total student loan balance of at least $10,500. In as little as 5 minutes applicants can qualify for student loan consolidation over the phone, and get their questions answered by a personally assigned Education Finance Advisor.
Students and parents can save significantly when they consolidate their student loans with NextStudent and take advantage of up to a 30 year repayment term, incentive packages and .6 percent “New Grad” discount.
NextStudent believes that getting an education is the best investment you can make, and it is dedicated to helping you pursue your education dreams by making college funding simple. Learn more about student loans at NextStudent.com.
By: Jeff Mictabor
December 20th, 2009
Consolidating student loans, like debt consolidation of traditional loans you can also opt for federal student loan debt consolidation.
Consolidation means your loans are bundled together into one new loan at a different rate of interest.
If you plan to consolidate your loans, do not include your spouse’s loan with yours. The danger of consolidating your and your spouse’s student loans is that if something happens to either one of you, your spouse will still be responsible for that loan. The burden of your private loan repayment would fall upon your spouse. This is where a life insurance policy beneficial, with your spouse as a beneficiary. This protects them from having to pay back your loan. Though there are no deadlines in federal loan consolidation programs, there are certain requirements that need to be fulfilled:
Your loans have to be fully disbursed to be eligible for Federal Consolidation Loan program.
You are no longer enrolled in school.
You are actively repaying your loan (including deferment or forbearance), or are in your six-month post-graduate grace period.
Your minimum consolidated loan amount is $10,000.
The best time to go for debt consolidation of your federal student loans is when you still are in your grace period, because of the lower in-school interest rate.
Every student has his or her reasons for going in for student loan debt consolidation, and so would you. These are some of the reasons why you should consider debt consolidation of your federal student loans:
Fixed rates of interest.
Lower monthly payments.
Payment incentives that save you money.
Single payment each month in place of multiple payments to different loan issuers.
New or renewed deferments.
You will need the following information when applying for consolidation of your federal student loans:
The balances and interest rates of your current eligible federal student loans.
The names and addresses of the companies that hold or service your federal student loans.
These are the companies that handle billing, collections, deferments, etc. of your current federal student loans.
The names and addresses of two personal references in the United States of America.
Federal government student loan consolidations have a fixed rate of interest.The fixed rate is calculated by the weighted average of the interest rates of the individual loans being consolidated. These are rounded up to the nearest 1/8 of a percent, up to the maximum of 8.25 percent.
By: A Procos