Within the debthelp.com series of articles on student loans, you will find great advice about maximizing loan benefits and affording college. Personally, I am vitally interested in what will happen after college, and that is the focus of this particular article.
It would be incredibly useful for students if more financial planning sessions were offered throughout their college careers, but for now learning about student debt consolidation is about as close as we can come.
As of late, private companies have taken the initiative in educating students about college debt. The downside is that, while the government is failing to better inform students, businesses are all too quick to sell something to students.
In 2006, for example, students who wished to consolidate their loans rushed to meet the Congressional deadline of June 30, so that they could secure many of the most favorable loan consolidation terms. As is so often the case when it comes to changes in student loan law, there is more than meets the eye about the June 2006 deadline.
In fact, many students who, for one reason or another, did not meet the June 30 deadline may still benefit. There are at least two things to consider in this case: (1) if you ‘substantially’ started an application with a consolidator before the deadline, this may be sufficient to lock-in the favorable terms, and (2) consolidation interest rates will settle down as the interest rate markets settle down.
What the Change in Law Means to College Loans
Within the debthelp.com library, there is a great article about changes in student loan consolidation law that you also will want to read. In terms of comparing consolidation benefits before and after 06/30/06, consolidation before entails a fixed interest rate set as low as 4.75% (or even lower through special premium offers), while consolidation after involves a variable interest rate.
This does not mean that if you consolidated after the deadline that you will not be able to find lower rates on negotiable offers. It does mean, however, that you will need to be very careful about your consolidation to secure a low rate. Confirm with your consolidator that a low rate is not just a low introductory rate that will increase in the future.
Students who did consolidate by 06/30/06 may be shocked to find that they ended up paying more interest afterwards than they did beforehand! This is because many student loans have subsidized low rates, or are based on the historically low interest of the last ten years.
The Perkins Loans, for example, often are left unconsolidated because the rates are lower than any consolidator will touch. Stafford loans, too, have been below 5% in recent years. Be careful when consolidating your loans in the midst of changing interest rates, because you may not get the best deal by following the wave of panic into consolidation.
Was this a “drop dead” deadline?
The 06/30/06 deadline was not necessarily a “drop dead” deadline. This depends on what benefit you really need for your situation (in fact, there actually were some negative changes included in the bill that hurt students). If you missed the deadline, rest assured that another opportunity will come around when interest rates will do their dance again.
Great Deals
Many consolidation companies will offer seemingly great deals in an effort to win your business. Check each consolidator’s reputation. Check to see if other students have posted any complaints about the consolidator on the internet. Many deals that sound irresistible are not quite what they seem.
- LOANS that can be consolidated are: FFELP (Stafford, PLUS, SLS, Consolidation), and FDSL (Stafford, PLUS, Consolidation)
- LOANS that cannot be consolidated are: private commercial lender loans and study program loans.
Finally, beware of consolidators who promise you a cash gift for signing up. Now, does that really make sense? The payment almost certainly will never offset an increase in your interest rate.
Changes in lending laws that affect your rights and the interest rates associated with consolidation have happened before, and they will happen again. Browse mailings from lenders and search for a consolidation loan if you choose, but always rely on the tried and true advice, “If it looks too good to be true, then it probably is".
Understanding Credit Monitoring Services
You don't want to live in your parents' garage or risk not getting a loan when you most need it. Credit monitoring services can help prevent bad credit caused by identity theft, but are they worth the cost?
Credit Monitoring: How it can HelpCredit monitoring services can help minimize problems caused by identity theft and fraudulent use of your credit. Frequent credit monitoring can also be useful for rebuilding credit.
Credit Monitoring after BankruptcyRepairing your credit after filing bankruptcy can seem difficult, but it's possible. Credit monitoring is useful for cleaning up the wreckage, correcting inaccuracies, and preventing additional credit problems.
Your Credit Rights After Bankruptcy: Discharged Debts and Zero BalancesRebuilding your credit should be at the top of your priorities after filing for personal bankruptcy. During this process, keep a close eye on your credit report as items can often be reported incorrectly by the credit reporting agencies. In general, all discharged debts should be reported as zero balances after bankruptcy. Often they are reported incorrectly and can end up hurting your credit more than necessary. To avoid these mistakes, understand your credit rights as a consumer even under the stain of bankruptcy.
What Happens to Cosigners When You File For Bankruptcy?Bankruptcy is a very powerful financial tool that can affect the lives of those surrounding the debtor. Cosigners of debt should pay special attention as they are often not protected by someone else's bankruptcy.
Guide to No Cosigner Student Loans
Are you a would-be student who would like to attend college, graduate school, or professional school, but are hesitant because you…
The advantages of using your local credit union to refinance your mortgageLocal credit unions increasingly are popular alternatives to traditional banks. While banks are privately owned,…
Debt Consolidation for Senior CitizensFew people have more financial choices, yet more opportunities to be overwhelmed by those choices, than senior citizens. Seniors…
What is the Best Loan and Debt Repayment Program?Incurring debt sometimes is necessary in order to meet one’s financial and personal goals, or to make payments for necessary…
Bad Credit Student Loans for High Risk StudentsCollege costs nowadays are through the roof and are only expected to rise in the future. Most students and/or their parents…
