Federal student loans are unique because they are enforced not by a lender, by the United States government. Because they really are more like taxes than traditional loans, you cannot discharge your student loans by declaring bankruptcy. In addition, the government can go to great lengths to compel you to repay – it is the government, after all.
With these factors in mind, you must consider that the government allows you to consolidate your federal student loans only one time. Making the decision to consolidate must be taken very seriously, and should be carried out at the best possible time.
Consolidation combines two or more loans into one larger loan with a lower interest rate. If you consolidate, you only will have to write one check each month as opposed to several, and you will save money because of the lower interest rate. You also may be able to spread your repayment over a longer period of time, thereby reducing your monthly payments. Alternatively, you also can choose to accelerate your payments over a shorter period of time, thereby reducing the total amount of interest you will pay.
The best time to consolidate is when interest rates are low. Unfortunately, interest rates have been rising for the past several years and probably will continue to do so. If you have not consolidated your federal student loans as of yet, it probably is a good idea to take action as quickly as possible. If you begin to hear media rumblings that interest rates are about to drop, however, then perhaps you should take a gamble and wait -- so long as you have no problem making your monthly payments in the meantime.
Educational Loan Forgiveness Programs for Teachers and Other Professionals
In addition to student educational loan forgiveness or cancellation programs available to teachers, here are some programs for those in other careers.
Rental Property Renfinancing RatesYes, although rental property refinancing can take longer and cost more than traditional home refinancing.
What is the scam that leads borrowers to take small amounts of cash in frequent refinances?Loan flipping promises a monthly paycheck from your home's equity, but it can drain your wallet and even lead to foreclosure.
Will Loan Borrowers Profit from Education Funding Proposals?The American Recovery and Reinvestment Act and the proposed federal Fiscal Year 2010 budget provide increased funding for education from "cradle to career." Will they also help the student loan borrower?
To Stay or Not to Stay with the FFEL ProgramAccording to a flash survey conducted by Student Lending Analytics, over 30 percent of responding postsecondary institutions are changing or considering a change from the FFEL program to the Direct Lending program for the 2009-10 academic year.
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