loan consolidation rate:Federal Loan Program

2007-03-08 10:33:40

( Financial )



If you are interested in consolidation loans and are a student, you should look into federal loan consolidation programs for students.

These allow you, as a borrower of federal student loan, to unite different types of loans into one.

Whether you are curious about the loan consolidation rate or have any other questions, the regulations and laws surrounding student consolidation loans is quite confusing.

The benefits of having federal consolidation loans?
• Your monthly payment is cut in half
• Your loan consolidation rate interest is locked in .
• Simplifies your finances – only one payment to make
• Your credit rating improves
• Flexible repayment options available.

Benefits with a good provider
Shop around, but you shouldn’t settle for less than:
• access to a consolidation expert with valid answers
• great borrower benefits:
o a good percentage off if you use automatic checking account deduction
o a percentage off for a number of on-time payments for larger loans
o fast consolidation turnaround – not more than two months.

Are you eligible?
If you want to benefit from the federal student loan consolidation rate, you need to have a certain amount outstanding in federal student loans.

This is what is NOT REQUIRED
• you don’t have to be employed
• you don’t need a consigner
• you don’t need collateral.

What is the loan consolidation rate interest?
The rate is a fixed rate which is equal to the weighted average of interest rates on all your current loans, rounded off to a certain fraction of a percent.

There are different starting point interest rates for different types of loans. Bear in mind that these are just starting points – you will receive a much lower rate with applicable discounts.

If you take out a consolidation loan during the loan “grace” period, the weighted average will be based on the in-school interest rates – generally lower.

No loan consolidation rate interest can be guaranteed because it takes time to process and application. Don’t rely on the rough estimates given to plan financially. The loan status may change during the period it takes to consolidate the loan. The interest rate is not only determined by the type of loan but also by how much owe. The only guarantee that can be offered is that the interest rates won’t exceed federally specified and published rates.

Why consolidate in your grace period?
During your post-grad grace period of 6 months you are entitled to apply for additional savings. If you consolidate with a certain loan during this period, you can lock in at a discounted rate.

Discounts – how do they work?
They remove time off the length of your loan. They don’t affect your monthly payment, but the overall time is less.

How do I repay a consolidation loan?
Your first payment is due within a certain period from the date of disbursement.
Various repayment schedules could be offered:
• Standard payments – fixed payments per month and a fixed time
• Graduated payments – these increase over time
• Income-sensitive payments – a variable amount according for your annual income
• Extended payments.


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