| Graduating from college is the easy bit. It's "growing | | | | you Big Government...the best student loans rates |
| up" that's difficult, especially when a freshly-minted | | | | you'll get are Federally issued Stafford, Perkins or |
| graduate realizes that she's taking her first step into | | | | PLUS student loans. Government-backed, these |
| full blown independent adulthood with on average | | | | Stafford and related student loan borrowing plans |
| $20,000 of student loan debt hanging off her neck. | | | | offer lower interest rates than private market |
| Student Loan "Grace Period" 6 Months After | | | | lenders can offer, along with more flexible loan |
| Graduation. Cleaning up after graduation parties and | | | | repayment terms. Why? Unlike a personal loan, the |
| removing end-of-senior-year mind cobwebs reveals | | | | Federal student loan transfers a portion of the |
| that each new graduate has a Federally mandated 6 | | | | borrower's risk to the Government...resulting in |
| month grace period in order to pay down the total | | | | lower-cost-of-funds. |
| student loan obligation...or to refinance the debt via a | | | | Are Personal Background Credit Checks Always |
| 1-time student loan consolidation. | | | | Required? No. Not every student, or her parents, |
| Consolidating Student Loans. Student loan | | | | necessarily has the cash or good credit history to |
| consolidation involves some simple, but important | | | | satisfy student loan lenders. The good news is that |
| rules. Only graduates can consolidate. Current | | | | "No child left behind" and the American commitment |
| students are barred from consolidating student loans. | | | | towards higher education...enters into a marriage of |
| * Student Loan Consolidation Rule #1. Identify 100% | | | | convenience with profit-seeking lenders...to create a |
| of your outstanding college student loans. Why | | | | secondary market in bad credit student loans. Risk |
| 100%? The Government only permits a 1-time | | | | adjusted, bad credit student loans carry marginally |
| student loan consolidation. Forget to include a past | | | | higher interest expenses, are generally more inflexible |
| borrowing and you get nailed. The National Student | | | | regarding payment lapses, yet offer longer |
| Loan Data System manages a database where your | | | | repayment terms which lowers the monthly |
| loan history should be recorded. | | | | out-of-pocket expense. Meanwhile Federal Stafford |
| * Student Loan Consolidation Rule #2. Time matters. | | | | or Perkins loans are 'credit neutral' and do not require |
| Consolidating student loans must result in your | | | | a credit background check in order for a student and |
| application being received on or before 30 June if you | | | | his family to qualify. |
| want to avoid potential interest rate increases. | | | | Federal Student Loans Versus Private Loan Sources - |
| * Student Loan Consolidation Rule #3. Freshly | | | | Pros & Cons. Historically, Federal PLUS, Perkins |
| graduated students are provided a 6-month grace | | | | or Stafford student loans offered the most flexibility |
| period following graduation. Identify, say, your total | | | | and, due to government backing, the lowest interest |
| Stafford student loan portfolio and then consolidate | | | | and repayment rates. Until 2006 Federal loans could |
| student loans in one fell swoop...and you'll receive an | | | | be "variable"... where the next year's interest rate is |
| instant 0.6% interest rate reduction on the balance. | | | | based on the Treasury market in a 90 plus trading |
| This discount could become serious money savings | | | | period ending 1 June. The new "variable rate" |
| over time. | | | | becomes effective 1 July each year for all past |
| * Doing The Math. Student loan consolidation is based | | | | variable rate loans. For example, 2006 Federal student |
| on math...taking weighted averages of all past | | | | loan rates for variable carried a 6.54% interest cost. |
| borrowings, then rounding up 1/8th percent to result | | | | * Congress Passes New "Fixed" Rate Student Loan. |
| in your consolidated student loan interest rate. All of | | | | Because of new legislation passed by Congress, all |
| this consolidation occurs prior to 30 June in the year | | | | "new" Federal Stafford loans from 1 July, 2006 |
| that you apply. | | | | onwards are now "fixed" at 6.8%. |
| Where Are The Lowest Cost Student Loans? Thank | | | | |