How to Consolidate Federal Student Loans – FDLP, FFELP, Etc

The cost of higher education continues to rise. Many students are unable to afford to finish college. Because of this, Student Loan Consolidation has been made available to students. Student Loan Consolidation is multiple loans combined into one loan. The U.S. Government and the Department of Education has developed Federal Loans to help students pay for their higher education. These loans allow the student to combine their federal loans into one loan. By paying one loan they’re paying one creditor.

Federal student loans are provided by the U.S. Government and the U.S. Department of Education. The Federal Direct Student Loan Program (FDLP) and Federal Family Education Loan Program (FFELP) have been developed to help students and parents consolidate their loans. These two programs allow students to consolidate PLUS Loans, Federal Perkins Loans and Stafford Loans. Students get lower monthly repayments and a longer payment period. These loans usually provide lower interest rates and fees. For these programs, the fixed interest is usually the weighted average of the interest rates of the loans that were consolidated. Congress set the formula for the federal interest rate. Federal programs give graduates longer repayment periods. A student can have a repayment period from 10 to 30 years.

There are two Programs for Federal Loan Consolidation:
o The Federal Family Education Loan Program (FFEL) was a result of the Higher Education Act of 1965. The program is funded by private and public partners. FFEL also makes use of government funds and private companies. The private companies that fund this program receive subsidies from the government.

o The William D. Ford Federal Direct Loan Program (FDLP), commonly known as Direct Loans. With this particular program, instead of the Government or a private company, the U.S. Department of Education acts as the creditor, handling the student’s loans.

Federal Loans have three types:
o The Perkins Loan is a consolidated loan provided by the U.S. Department of Education for college students. It has a fixed interest rate of 5% for a 10 year repayment period. With usual consolidation companies you are required to start repayment after six months of graduation. With the Perkins Loan you have a nine month period after graduation. The loan limits for undergraduates are $5,500 per year with a lifetime maximum loan of $27,500. For graduate students, the limit is $8,000 per year with a lifetime limit of $60,000.

o Stafford Loan offers a lower interest rate but has strict eligibility requirements and limits. There are subsidized and unsubsidized loans. With Subsidized loans the interest is paid by the Federal Government. For Unsubsidized loans, the students pay the interest. Examples of Stafford loan companies are Sallie Mae, JP Morgan Chase, Citibank, Bank of America, and Wachovia Education.

o A PLUS Loan is for parents and graduate students. To be eligible for this loan, the parent or graduate student has to pass the credit check. Usually interest rates are higher. This loan allows the parent to make use of the total cost of the college fees such as tuition, room and board.

Bad Credit? – No Problem For Long Term Loans

Oftentimes it is hard to get a loan when your credit score is not as high as you would like it to be. Most lenders will have a hard time agreeing to loan you any money for obvious reasons. They cannot guarantee that you will be able to repay the loan once they agree to hand over the money. Because of this, lenders had to figure out a way to solve this problem, and the solution was in the form of a long-term loan with a bad credit loan product. The long-term loan for bad credit was designed for those borrowers who have had a difficult time with their credit in the past, but who are ready to become responsible borrowers who are worthy of credit.

Money For Any Reason

The loans created by using this option can be used for a multitude of purposes. For example, home renovations, automobile purchase, educational loans, debt consolidation, and more. Bad credit is usually caused from non-payment of previous loans, overdue debt, or bankruptcy. However, if a borrower pays their loan and in an appropriate fashion, their bad credit score will be repaired. The long-term loan can help those who have bad credit to reestablish themselves as good borrowers who are worthy of a loan. The long-term bad credit loan gives you a chance to elevate your credit score while still gaining access to the money that you need for immediate needs.

Obtaining Your Bad Credit Loan Up To $75,000

Long-term bad credit loans are typically written as secured so collateral must be put up to receive this loan. If you pledge a more valuable piece of property as collateral, you can get a higher amount loaned to you. Generally these loans can range anywhere from $5,000 to $25,000 but can even extend to $75,000+ in some situations. The loan most be repaid anywhere from five to thirty years, but the interest rate is a lot lower compared to other loans. Because the loan repayment is long-term, it reduces the high monthly payment burden that a borrower usually is faced with. Therefore, they are more easily able to hold up their end of the bargain.

Applying For Your Loan Online Or In-Person

There are several ways in which a borrower can take advantage of long-term bad credit loans. You can visit your banking institution to physically fill out the loan applications, or you can apply online to save time. Applying online is not only quicker for the borrower, but it also provides quicker results in comparison to pen and paper applications. The internet is packed full of loan providers who want to give you a loan with a competitive interest rate. However, take your time and research each one of these companies to determine which loan is the best deal for you. You do not want to rush with this decision because with it being a long-term bad credit loan, you will be repaying the loan for several years. Better to take your time and find the best deal rather than selecting the first one you come across.

Student Loan Consolidation Companies – How to Choose the Right Company For You

Student loan consolidation is a way for graduates to have all their student loans combined into one loan. This loan is handled by one creditor. The creditor pays the multiple loans in full, leaving the student to pay for one new loan. Students no longer need to pay multiple student loans with separate billing cycles, dates or interest rates. They now have one loan and one interest rate, to be paid to one creditor.

When considering loan consolidation. You should do the research. First know the terms of agreement, monthly payments, and interest rates for each loan and creditor before looking for a loan consolidation company or program. When selecting a company or program, make it a point to compare them; know their terms of agreement, interest rates and obligations. Once you have carefully selected a company or program you feel is suitable for you provide them the information you had gathered.

There are Federal and Private Student Loan Consolidations. Federal Student Loan allows a student to have all their Federal loans combined into one new loan.

The government provides Federal programs such as:

o The Federal Family Education Loan Program (FFEL). FFEL will soon be replaced by the Direct Loan program and Pell Grant and the Federal Direct Student Loan Program (FDLP). These programs allow students to have their loans from Stafford Loans, Federal Perkins Loans and PLUS Loans combined into one Federal loan. These are fixed-rate loans backed up by the U.S. Government, offered to students and parents.

o The Federal Direct Student Loan Program (FDLP) was created by the U.S. Department of Education in effort to assist parents and students with their loans.

Private Loan Consolidation is combining private student loans into one new loan. Before considering private loan consolidation, apply for a federal loan, the reason for this is to better maximize federal loans that are available. Private companies such as Sallie Mae recommend it.

Here are several Federal Loans:
o Perkins Loans are funded by the government. They carry a very low interest rate but are need-based, a financial officer would determine if a student is eligible.

o PLUS Loans are for parents of undergraduate students. There are also PLUS Loans for students as well. Payments on this plan will begin once this loan is approved. PLUS loans allow you to take up to 10 years for repayment. Commercial banks and online lenders offer PLUS Loans for both parents and students.

o Stafford Loans offer a low interest rate. They do not raise their interest rates any higher. Stafford loans do not require a student to pay any interest while at school and are not required to pay the loan in the six months after graduation. It offers 10 years for repayment.

Here are a few private companies that offer Loan consolidation:

o Loan Approval Direct offers interest rates as low as 3 percent. Reducing a student’s monthly loan to as much as 60 percent.

o SLM Corporation or commonly named Sallie Mae. Sallie Mae offers a range of options depending on the type of school or what education program a student would have. Such programs include Federal Stafford Loan, Parent PLUS Loan, Graduate PLUS Loan, Sallie Mae Smart Option Student Loan, Continuing Education Loan and Career Training Loan.

o Citibank provides programs such as CitiAssist Undergraduate and Graduate Loans, CitiAssist Health Professions; CitiAssist Residency, Relocation and Review Loans; and the CitiAssist Law and CitiAssist Bar Exam Loans. Students receive a 0.25% interest rate reduction in their auto-debit payment program. These programs take up to 20 to 25 years to repay.

o EdFed is another private company. By selecting one of their plans a student can lower their monthly payment by as much as 60 percent. They also provide interest-only payments. The fixed interest on EdFed is the weighted average of the interest rates of the loans a student consolidated, rounded to the nearest 1/8th percent.