Non-profit Student Loan Consolidation
Due to the rising cost of education, a large number of students and families are forced to take out loans to finance a college degree. Student loans provide a quick and easy way out for parents and students to find the money they need to pay tuition expenses. Loan disbursements can be used to cover the cost of tuition, books and study materials and other education-related expenses. However, student loans are required to be paid back in full with interest over a specified repayment period. That means it’s better to use student loans as a last resort, first seeking financial aid in the form of grants, scholarships and work-study.
The continuous increase in the cost of education, combined with borrowing limits on loans, often leads to students taking out more than one loan over the course of their education. This can complicate repayment. Keeping up with multiple loan payments each month may sound simple, but it can become quite difficult and adversely affect a student’s finances-if, for example, they begin missing payments. Consolidation is one way to address this issue. Consolidation allows students to combine their payments into a new single loan with one interest rate and one monthly payment. It’s an excellent way of simplifying the repayment process for those students with more than one student loan. The federal government also provides a similar service to students who have federal student loans. This non-profit student loan consolidation program is designed to make loan management simpler, minimize loan payments and (potentially) lower interest rates for student borrowers. These options are only available for students who have taken certain federal loans such as Stafford loans, Perkins loans, PLUS or GradPLUS loans and a number of others.
Eligibility Criteria and Benefits
If you have taken out more than one federal student loan, you may be eligible for consolidation. It is important that you have not defaulted on any previous loan payments. Having a default status on a loan may render you ineligible for consolidation. If your application is approved, all of your loan payments will be combined into a single monthly payment. This may be lower than the individual payments combined and carry a fixed, low rate of interest. Though it’s important to note: loan consolidation may also increase the total time you have to pay back the amount owed.