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Many college graduates wonder if an education is worth it, given the economic trends of the past 25 years. In the past, a college degree almost guaranteed a good job.
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Today, graduates struggle to start their careers and sometimes land with only one foot in the house.
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You will still have money on the loan, even though you may not have graduated or found a high-paying job.
Just a reminder that it doesn't matter if you hate the program, the professors, the school, or the mascot. You've signed on the dotted line and now it's your responsibility until you repay the loan.
When debt is staring you down on top of debt, it may be time to consider student loan consolidation.
Student loan consolidation is when you take out a new loan that pays off your current student loans. This process eases you from multiple payments and providers to just one monthly payment.
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With federal student loans, you get a new federal loan through the Department of Education. That leaves you with one monthly payment and one loan that covers all the loans you took out while in school.
The interest is based on a weighted average of the loans you combine. Note that the fixed interest rate may differ from the 8% interest rate used on most federal student loans. It can be higher or lower.
Private student loan consolidation is also called refinancing. If you qualify with a private lender, you can roll your existing loans into a new loan while lowering your interest rate and saving money.
You cannot combine federal and private loans into one new Department of Education loan. However, you can do this with a private lender.
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(Note: “Should I consolidate my student loans?” is a question we get asked all the time here. That's why we've created this simple guide, which you can download for free, to help you figure out if student loan consolidation is the right choice for you. Click here to learn more.)
Student loan consolidation is the creation of a new federal student loan by the Department of Education that pays off and consolidates all of your existing student loans into one loan.
Consolidation won't save you money over the life of your loan, but it can give you access to new payment plans or forgiveness plans.
Student loan refinancing, on the other hand, is a financial choice you make when working with a private lender.
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You can take advantage of lower interest rates and potentially consolidate your federal and private student loans in the process. Refinancing specifically saves you money.
If you consolidate your federal and private loans during this process, you lose access to federal protections and repayment options.
Your entire financial history is taken into account when you apply for refinancing and is used to determine your interest rate.
Since the interest rate is fixed based on an average, a straight loan consolidation may not actually save you much money because it puts all the loans into one easy payment because… well, people have a hard time keeping track of that.
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Also, if we're being honest, when debt exceeds income, we get depressed, pretend it's not there, eat ice cream and watch Netflix.
Because refinancing can only be done through private lenders, you will lose the federal benefits that come with these loans.
But a refinanced loan will have completely different terms and you can negotiate a lower interest rate.
I recommend going through your credit union or getting one that will play ball. They are more likely to kiss you for your work.
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Talk to several credit unions and see which one offers the best terms. Of course, this will be based on your income and credit score, so hold off on applying for credit cards.
Many graduates leave school with at least one loan each year. If you're struggling to keep track of your monthly payments, consolidation is a great way to simplify multiple monthly payments into one.
If your payments are higher than you are comfortable paying, consolidation may allow you to extend your payment term and lower your monthly costs.
(Bonus tip: Want a complete guide to whether you should consolidate your loans? Here are the 17 most important factors to help you decide whether you should consolidate your loans. Click here to learn more and get your free guide.)
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Getting together may seem like a no-brainer, but it's not for everyone. There are some downsides depending on your situation.
When you consolidate, you can choose not to include certain loans in your consolidation loan. For example, if you are working on Public Service Loan Forgiveness (PSLF) on your Direct loan, you must leave your Direct loan in your consolidation to avoid losing forgiveness benefits.
(Did you know? Consolidation can lower your payments, shorten your loan term, provide forgiveness benefits, and average higher interest loans. Worth considering. Click here for more information and a free guide.)
If you fall behind on your federal loans, the government can begin garnishing your wages (15% of your paychecks) without you being able to prove your case. Private creditors must take you to court before they can begin garnishing your wages. Consolidation offers a way to stop payroll processing by:
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Yes, student loan consolidation can lower your payments. You can choose a longer payment period that will lower your payments, choose an income-based payment plan, or refinance with a private lender and enjoy a lower interest rate.
Federal student loans will not lower your interest rate. Private student loan refinancing can lower your interest rate if you qualify — and you can consolidate your federal loans with your private lender if you choose.
USSLC has numerous 5-star reviews for customer service, efficiency and ability to streamline the process. Loan servicers are rarely interested in working with you to save money; You are another number among them. The USSLC can be reached by phone at 1-877-433-7501 or by email at [email protected]
When you are 270 days behind on your student loan payments, you are in default. At this time you will be given two options: consolidation or rehabilitation.
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Consolidation creates a new loan that replaces all of your existing loans. Consolidation is your right and after filling out the necessary forms your loans will be consolidated. Your credit report or financial history is irrelevant. After consolidation, you can enter into an income-driven payment plan, or take advantage of deferment or forbearance, which delays payments indefinitely.
Refinance is a program where you make nine payments that are "reasonable and affordable" to you, regardless of your actual student loan repayments. After the last payment, your loan is rehabilitated and you are not in default. Rehab requires you to negotiate with your lender what payment amount is "reasonable and affordable" for you. They will fight for a higher fee than you. You will have to rehabilitate each of your loans individually. Rehab requires you to start making nine payments immediately and without delay. Student loans and scholarships are the 2 most popular types of financial aid. Learn the pros and cons of each and how they fit into your support package.
All things considered, the average cost of college is over $35,000 per year. This is probably why most students rely on some form of financial aid.
The 2 most common types of aid are student loans and scholarships. Both can help pay for college, but neither works.
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This article will explain how each type of aid works, along with its pros and cons, then compare how they stack up against each other.
Student loans are one of the most common types of financial aid. Since they are loans, you will eventually have to pay them back. It means they have money.
However, they are generally the easiest form of assistance because they are based on need. Nearly 43 million borrowers have some level of student loan debt.
Federal loans, as you might expect, come from the federal government. The government gives money to your college, which it then gives to you to use for tuition costs.
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On the other hand, private loans come from banks, credit unions, online lenders, and other financial institutions. More lenders mean more options, but they don't have the special features associated with federal loans.
A common type of federal student loan is the Stafford loan. This is the loan that people talk about when they discuss federal student loans.
It got its name when former Vermont Senator Robert Stafford introduced legislation that replaced the Higher Education Act of 1965 in 1988.
The FAFSA is free to file and you can complete it in under an hour
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