School loan consolidation provides you an opportunity to merge all your loans and pay only once for all of them. There are a number of options catering to almost everyone’s needs. These options are divided into the following two major categories:
Federal loan consolidation
Private loan consolidation
This type of school loan consolidation provides financial help to those who are enrolled at schools that participate in federal aid programs. By school we mean a two-year or four-year degree awarding public or private college, university or trade school.
Consolidation can help reduce your student loan debt by fixing and reducing the interest rate on your loans. This loan option will also combine your separate loan debts into one package thus managing your debt paying options.
Eligibility for federal loan:
In order to qualify for federal consolidation, one should check out the following things before applying for it.
The candidate should no longer be enrolled in school (defined as being enrolled less than half-time)
You must be in the ‘grace period’ of the loan or must be actively repaying your loan.
Most consolidation companies require a minimum loan amount i.e. $10,000 is typical.
Types of Federal Loan:
Federal Family Education Loan Program: These are public-private loans aimed to deliver and administer guaranteed educational loans to parents and students. It provides the following types of loan for post-secondary education:
Stafford Loan: Stafford loan consolidation is a fixed-rate refinancing program that combines all your existing federal loans into one new loan.
PLUS Loan: PLUS loan consolidation is another form of federal school loan that allows you to pack all your PLUS loans previously taken to finance your kid’s education, into a single loan with a lower monthly payment.
Graduate Stafford Loan Consolidation: Graduate Stafford loan consolidation is a great financial tool for those who have recently graduated and are trying to pay off their graduate Stafford loans.
Federal Direct Consolidation Loans: Federal direct loan consolidation is a practical repayment tool that enables you to combine all your Federal Direct student loans into a single loan. Federal Direct loan offers the following consolidation options:
· Direct Subsidized Consolidation Loans: Thiscombines federal student loans eligible for interest subsidies, such as subsidized FFELP, Direct Loans and Federal Perkins Loans.
· Direct Unsubsidized Consolidation Loans: Thiscombines federal student loans not eligible for interest subsidies. If any one of the loans to be consolidated is unsubsidized, then you are eligible for Unsubsidized Direct Consolidation Loan.
· Direct PLUS Consolidation Loans: Thiscombines FFELP PLUS and Direct PLUS loans.
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