| Many students and parents cannot afford the rising | | | | - Year 2: $3,500 |
| costs of a higher education. Majority of these | | | | - Years 3 & 4: $5,500 |
| students have multiple student loans. These loans | | | | - Graduate $8,500 |
| belong to different creditors. These creditors have | | | | Ten years is the standard repayment period. This |
| different terms of agreement, interest rates and | | | | period can be extended up to 25 years for students |
| billing cycles. The loan allows students to have these | | | | with a $30,000 debt. Federal loan consolidation has a |
| loans turned into one new loan. This new loan would | | | | standard formula for interest rates. The interest rate |
| be handled by one creditor. | | | | is the weighted average of the interest rates on the |
| When students consider choosing a loan consolidation | | | | loans being consolidated, rounded up to the nearest 1 |
| creditor they need to consider the creditor's | | | | 8 of a percent and capped at 8.25%. |
| requirements, terms of agreement, interest rates and | | | | Private Student Loan Consolidation is when a private |
| benefits. Student loan consolidation has two methods; | | | | company or creditor combines multiple private loans |
| these are Federal and Private loan consolidation. Most | | | | into one new loan. This creditor handles the loans, |
| private creditors advise you to first apply for a | | | | allowing the student to pay for one loan to one |
| Federal student loan consolidation to maximize federal | | | | creditor. To name a few of these creditors are |
| benefits. | | | | NextStudent, Chase and EdFed. For private creditors, |
| Federal loan is when the U.S. Government or the U.S. | | | | requirements are based on each company's standard |
| Department of Education is the creditor. Federal | | | | or requirements. Credit qualification may vary as well |
| student loan consolidations are specifically created for | | | | if there is a co-signer. |
| low-income students and parents. There are two | | | | Requirements would commonly be: |
| programs available for Federal Loan Consolidation: | | | | - The student must be enrolled at least half-time at a |
| Federal Family Education Loan Program (FFELP) and | | | | 4 or 5 year college or university. |
| Federal Direct Student Loan Program (FDLP). These | | | | - The student must be the age of majority in his/her |
| programs consolidate federal loans including Stafford | | | | state. |
| Loans, Federal Perkins Loans and PLUS Loans. | | | | - He/she must be working on their undergraduate or |
| For a student to be eligible for federal loan | | | | graduate degree. |
| consolidation the following would be checked or | | | | - There is no income requirement. |
| required: | | | | - Co-signers are not required to provide proof of |
| - Credit history would be checked. | | | | income. |
| - A student would need to be a U.S Citizen or a | | | | The interest rate for private loan consolidation is set |
| permanent resident. | | | | by the creditor. Interest rates will be based on the |
| - The student must be either a full or half-time | | | | student's credit history. The cost would be relatively |
| student. | | | | low if the student and the co-signer's credit are |
| Federal loan limits are set by Congress. These are | | | | approved. The graduate has six months after |
| the limits as follows: | | | | graduation before being required to start repayment. |
| - Year 1: $2,625 | | | | The standard term would be 15 years. |