Entering the “real world” already saddled with a large amount of debt isn’t the ideal way to start a professional career, but approximately 64% of college graduates could not have made it through their educational careers without student loans. When Mom and Dad can’t (or won’t) foot the bill, an aspiring student has to take out loans in order to achieve the level of education that he or she desires.
Some people will spend ten, fifteen, even twenty years paying off student loans. Because they are just beginning their careers and getting started with their adult lives, paying off student loans early might not be an option. Grace periods for student loans often end as soon as the student graduates, leaving little time for recuperation upon finding a new job.
To complicate matters, most students are forced to take out several student loans before their degree has been earned, which turns the repayment process into a complicated mess. Students forget who they owe and when they owe, which results in default and often much higher interest rates.
In order to save time and money, many students are turning to Student Loan Consolidation Programs, the most popular of which is aptly called the SLCP. A student loan consolidation program is a way to combine all loans into one lump sum, thereby simplifying the process and decreasing the interest rates. The SLCP can also extend your repayment plan and acquire lower monthly payments.
Here are some frequently asked questions about the Student Loan Consolidation Program.
What are the benefits of a Federal Student Loan Consolidation Program?
The biggest benefit of consolidating your loans is the low interest rate. Colleges and universities are constantly raising their loan repayment rates, and securing a fixed interest rate now will save a lot of money in the future. The SLCP also has a borrower’s program that helps lower monthly payments, and can give you an even lower interest rate if you apply during your grace period.
Can a husband and wife consolidate their student loans into one lump sum?
The Federal government does allow spouses to combine their loans into one monthly bill using the Student Loan Consolidation Program. This can certainly make a young couple’s life much easier, and will simplify the inevitable changes in the budget as cars, houses and furniture are purchased.
Before consolidating your spouse’s loans with your own, however, talk with a loan specialist who can help you to evaluate your specific situation. It is advantageous for some couples to consolidate their loans, while it is detrimental for others.
How long is the application process?
In most cases, the application process for a student loan consolidation program is 1-2 months. The loan specialists have to contact your current lenders, obtain credit information, and review your application. You can expedite this process by filling out your application as completely and accurately as possible and by obtaining requested information as soon as you can.
What is the difference between a variable interest rate and a fixed interest rate?
Student loan APR’s (annual percentage rates) are the same as those for a credit card or for a mortgage. When you take out a loan with a lender, you are charged an interest rate on top of the loan repayment, which can be an either fixed interest rate or a variable interest rate.
Variable interest rates, which are attached to most student loans, fluctuate with the economy, with the lender’s needs and with the student’s tenacity in repaying the loan. That means that your interest rate could be 5.86% one year, and then jump to 7.5% the next. Most student loans have a cap of 8.25%, which means that your student loan APR could very easily reach 8.25%, regardless of the starting APR.
A fixed interest rate, on the other hand, does not change. When you sign the paperwork for the loan, you are assigned an interest rate, and that APR does not change during the loan repayment process. A student loan consolidation comes with a fixed interest rate, which makes budgeting easier and makes higher payments a non-issue.
What are the eligibility requirements for a Student Loan Consolidation Program?
As with any program, there are qualification requirements to obtain a student loan consolidation. For an SLCP loan, you must have at least $7,500 in outstanding student loans and not be in default on any existing loan. With SLCP, you don’t have to worry about time-consuming credit checks or astronomical fees; they don’t charge anything and they don’t run your credit when you submit an application.
What is the maximum repayment term for a student loan consolidation program?
Most student loan consolidation programs, including SLCP, offer repayment terms lasting up to thirty years. Before choosing the longest repayment term, however, carefully examine your budget, your interest rate and the amount of money that you owe. Sometimes it is better to choose a shorter repayment term so that you can get the payments over with more quickly. This can depend on your income, your spouse’s income and your standard of living.
How do you choose a student loan consolidation program?
I’ve mentioned the SLCP throughout this article for various reasons, even though there are hundreds of student loan consolidation programs from which to choose.
First, you must make sure that the lender is legitimate. There are too many fraudulent companies in the market who are simply after your money, and will eventually cost you more than if you had just stayed with your original lenders. The SLCP is known for securing low interest rates, which is why I recommend them.
Second, it pays to shop around. Talk with several different loan consolidation companies and refuse to sign anything until you are told exactly how you can benefit from their services. In some cases, you won’t get a lower interest rate, and in fact it might be higher. Don’t be persuaded by fast sales pitches with no meaning behind them; make your loan consolidation program work for you.
And finally, go with what works. The SLCP is one of the foremost choices for student loan consolidation programs, and with Federal backing and unlimited resources, they present a strong and healthy force behind any repayment program.
How do I learn more about student loan consolidation programs?
If you are still in school, visit with your counselor and discuss your different options. In your school’s administration office, they should have information concerning the different types of programs, and a counselor should be able to help you make the right decision for you.
You can also contact Wendy Hill of the SLCP at 617-399-8025. You can learn more about what the SLCP can do for you, and how you can lower your interest rates and monthly payments.