Living with two or more student loans can be really challenging, especially for those trying to establish a career or start a family. Fortunately, there is a potential solution to this problem in the form of student loan consolidation.
With loan consolidation, one new combined loan takes the place of your existing loans. The big advantage to this is that it can lower your payments and lower your interest rates. It can also make your life much simpler because you will only have one payment and one lender to deal with.
There is a also ways that you can erase your student loan debt by serving your country and your community. Public Student Loan Forgiveness programs (or PSLFs) allow individuals to get out of some student loans by working for the government or certain non-profit organizations.
The good news is – you can qualify for PSLFs by working at any local, state or federal government job. The bad news is that not every student loan is covered by the program. You will also have to wait 10 years and make 120 qualifying loan payments to achieve total debt forgiveness, so it is not an immediate solution.
With Private Student Loan Consolidation, a private lender pays off your existing loans and issues you a new obligation. In contrast, Direct Student Loan Consolidation is actually a federal-lending program created by The Reauthorization of Higher Education Act of 1992.
President Obama greatly expanded direct student consolidation through the Federal Direct Student Loan (also known as the Obama Student Loan Forgiveness) Program in 2010. This program offers significant advantages for people who are struggling with student loans.
Unfortunately, only certain student loans qualify for PSLF. This means the program may not forgive all of your student loan debt. Under the current program only direct-subsidized, direct-consolidated, direct unsubsidized, Direct PLUS and Stafford loans qualify.
Private student loans and loans that are in default will not qualify for PSLF. If you qualify for PSLF but your loans do not, you will have to consolidate them before applying. Fortunately, it is possible to convert other kinds of student loans to obligations that are eligible for PSLF by taking advantage of the Direct Loan Consolidation program.
That depends on your situation, if you have several loans consolidation is usually a better deal. If you have just one or two student loans you will usually be better off with deferment.
Yes, but only if you have at least one Direct Loan or Federal Family Education Loan (FFEL). Perkins Loans are not eligible for federal consolidation programs on their own.
Be careful when you consolidate a Perkins Loan because you might lose your benefits and end up paying more. We have seen a lot of borrowers get into trouble by consolidating a Perkins Loan.
Here are some of the potential problems from Perkins Loan Consolidation you must be aware of:
There are better repayment options for those with Perkins Loans including deference, Teacher Student Loan forgiveness and forbearance.
Student Loan Advisors can show you how to take advantage of these options.
Simple – get a free consultation from a Student Loan Advisor. The Advisor will discuss your situation and tell you what your options are.
Forbearance is a federal program that provides a temporary pause in FFEL and Federal Direct Student Loan payments for those who are unable to pay.
Consolidation results in a new federal student loan that replaces a number of existing loans. Consolidation can change your payment amounts and interest rates, while forbearance simply puts the payment off to the future.
Yes, if the loan was sponsored through the U.S Department of Education and you have at least one other Federal Education Loan. This usually means a Direct Loan or a Federal Family Education Loan, but Perkins and PLUS Loans can also qualify.
The following Health Professions Loans are eligible for consolidation under the current rules:
It is often possible to lower your monthly payment and lengthen your repayment period for Health Professions Loans through consolidation. Another great benefit is that you will have just one payment a month to deal with.
We find that it is usually a good idea for a person struggling with a Health Professions Loan to discuss it with a professional, because there are many options available. Despite the advantages to consolidation, there are some borrowers that would be better off going with other options.