In a recent State of the Union Address, President Obama mentioned a Special Direct Consolidation Loan available to some borrowers with federal loans. This loan is not your typical Direct Consolidation Loan, and is only available for a brief period this year. This is a great opportunity for borrowers with the old, FFEL loans, as it will make managing repayment a much simpler task. Let’s take a look at how this loan works.

Background

First, let’s understand a little bit about historical student loans. Before Direct Loans came into play, the Federal Family Education Loan (FFEL) Program included four types of loans: Stafford, Unsubsidized Stafford, PLUS, and Consolidation. These loans, while still federally guaranteed loans, were made by private lenders and serviced privately. Now under the Direct Loan Program, federal loans are funded directly through the government (though there are four companies who service the loan on behalf of the Dept. of Education).
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For students about to graduate, you may want to check out the article New Grads, Start Thinking About Consolidation. This will give you helpful tips on why consolidation can be a good option.

Conversely, the article What NOT to do when Consolidating your Student Loans tells you just that. It provides useful information on the types of situations where consolidation might not be the best option.

While consolidation for federal loans is usually a good idea, it may not be so black and white with private loans. In the current economy, private lenders have been reluctant to grant consolidation loans. Should I Consolidate my Private Student Loans can help students to decide how and where to go to consolidate their private loans.

Still have questions about consolidation? This post may be able to help. From Our Forums: Consolidation Question Quartet! answers a few common questions about consolidating federal loans. Maybe it’ll answer yours. If not, you can always check out the Financial Aid Forum’s consolidation help section.

Hopefully these articles will proves useful in the upcoming months. Remember, if you need more information regarding loan consolidation, visit StudentLoanConsolidator.com.

If you’ve ever seen those ads on TV late at night asking, “Do you know where your kids are?” you know what I’m talking about. If you haven’t, well, now you do!

Just as important as knowing what your children are up to at night is the status of your student loans. Specifically, their interest rates and repayment plans. Did you know that because nearly all private student loans have variable APRs, your interest rate could have changed several times in the past 2 years?

One way to make it easier to keep track of your loans is to consolidate them. Of course, there are a lot more benefits than just having one bill and interest rate. Here are some more loan consolidation benefits:

• A credit score boost
• Lowers your monthly payments up to 50% (at the expense of more interest overall)
• The interest rate for private consolidation can actually end up being lower than the average of your consolidated loans (saving money!) based on credit

Sound good to you? If so, then get started on a loan consolidation!

If you’ve heard the word about the reform currently in progress across the country, you probably are aware of the end of the FFEL program and exclusive federal consolidation returning to the Department of Education. If not, read this page on upcoming changes to get acclimated.

One question we get a lot is, “If FFEL is ending, where do we apply for consolidation now?” The answer is Direct Loan Servicing of the US Department of Education. You can apply for consolidation here: Loan Consolidation Center

Make sure to have all your account numbers and payoff balances ready to make the process quick and error-free as possible. Good luck!

Whether you are a recent college graduate starting a new job or moving home with the parents (don’t worry – it’s only temporary), money is an issue regardless of your situation. This summer, if you’re planning a trip or just looking to pay for a new apartment for the fall, you are always looking to save a few bucks.

Enter student loan consolidation. Consolidating your federal student loans can save you a bundle. Let’s say you have $40,000 in federal loans. Your estimated current monthly payment is probably around $457. After consolidation, that payment drops to about $275, for a monthly savings of $182 per month! Would you like an extra $182 per month? I know I would.

Visit StudentLoanConsolidator today to get started! Have questions about consolidating federal and private student loans? Post them in our Financial Aid Forums.

Seems strange, doesn’t it? You wouldn’t think that taking out a new consolidation loan could actually benefit your credit score and history, but you would be surprised of the positive impact it has on your record.

Let’s think about the process abstractly for a moment. Say you have six federal loans, and three private student loans accruing interest on your credit history. This means that you have nine open loans under your social security number, not including any revolving lines of credit (credit cards, store cards) you may have, among other potential things. The object of the game is to have as few items on your credit record as possible, while keeping them all up-to-date on payments and establishing solid account history with them. (more…)

What is the first rule of finance? Money is worth more to you now than it ever will be to you in the future. This is true in a strictly logical sense and in an emotional sense; don’t you feel calmer, less stressed out if you know you have more money in the bank… just in case? Or perhaps you have a mortgage and you’re paying for both a new house/apartment AND a student loan… wouldn’t having some extra money available to you each month be useful?

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A question we receive often in our financial aid forum and through email is whether or not a student can consolidate their loans multiple times. The answer is rather simple: no if you are not taking out more, and yes if you are.
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Shakespeare aside, figuring out if student loan consolidation is right for you can be a tricky question. It largely depends on your income and loan interest rates, and isn’t always the right choice for every student.

Currently, both federal and private loans can be consolidated by their separate types. The point of it all is kind of like refinancing — you are trying to get a better interest rate on your loan and lower monthly payments, but also end up extending the repayment period (meaning you pay more overall.) Also, if most of your high interest loans are much smaller than the lower interest ones, consolidation may actually defeat the purpose of the cost savings.

The ideal situation and reason for consolidating loans is that they are large, have high interest, and you have a lot of trouble affording the monthly payments. Although having separate loans with different APRs and lenders may be annoying, a bad consolidation can end up costing you way more in the long run.

There is no doubt that the best time to consolidate your federal student loans is during you grace period. Consolidation makes jumping into the repayment process a lot easier because it leaves you with one interest rate, one lender, and one monthly payment. However, what happens if you are planning on deferring your loans to go to graduate school? Should you still consolidate? And will you be able to consolidate again with your graduate school loans? The answer to both of these questions is yes.

When you go to graduate school you qualify for in school deferment of your federal loans. The easiest way to do this is to consolidate your loans first and then defer the new consolidated loan. That way you only have to defer with one lender.

Some students worry that if they consolidate their undergraduate loans before they go to graduate school they will not be able to consolidate again once they get out of graduate school. This is not true. Once you consolidate your loans you cannot consolidate again unless you take on new loans. Since the graduate student loans are new loans they can eventually be rolled into your first consolidation.

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