Student Loan

Refinance Student Loans to Save Money

Many college grads often face the question of wether it is wise to refinance student loans that were taken out during their college years to fund their college education. School loans can become a burden after graduation.
In today’s economy young college students find themselves short on funding for their college education. With the ever increasing college costs and the lack of employment for these college students it is becoming more common for them to utilize college loans to cover the expense of college.
Today two out of every three college undergraduates graduate with some amount of student debt including undergraduate loans,  a 2008 College Board study proved. The average education student loan amount was: $22,700 per graduate–not including the student loan debt accumulated by the half of entering college students who never earn a degree.
Unfortunately, when the students finish their studies, they are confronted with the repayment of the loans that accumulated over the years. This may be the time to refinance the loan rates to lower monthly payments.
As we can see it can be necessary for a large amount of students to utilize financial aid and federal student loans to finance their education. If the proper steps and practices are not followed it can lead to a costly mistake that could ad up to thousands of dollars and higher interest rates.

Refinancing Student Loans to Ease Monthly Payments

The process of paying off undergraduate loans with a renegotiated loan, usually at lower loan rates and new payment period, is called refinancing. Student loans are most often refinanced to lower the monthly payments of the original loan. When a graduate wants to refinance or consolidate student loans, there are several student loans options to work this out with the banks or government.
There will be a few things to consider before refinancing a student loan. there are choices to how the monthly payment can be lowered. These options will help with the management of the monthly payment by negotiating a lower interest rate or extending the length of the loan by up to 15 years.  Both options have advantages by lowering the original monthly payment. A lower interest rate is the preferred option over a longer term as it will reduce the long term cost of the loan with lower monthly payments thus saving a greater amount of money.
Most student loans utilize a deferment, or grace period, allowing the individual to begin employment for a period of time before the first loan payment is due. This deferment period, usually six months,is a great time to explore the options available to refinance or consolidate students federal loans outstanding.
Individual lenders have different qualification requirements for student loan refinancing and consolidation. Most refinance and loan consolidation  companies require that the loans not be active, that is you cant be currently enrolled in college while trying to refinance that loan. Many lenders require a  minimum balance on the loans, and the balance is arbitrarily set by the institution.
When comparing features of loan options it is critical to do a complete job of examining features and also requirements before the applications are signed. Try and seek out advice on student loan refinancing before you start, the university attended may be a good starting point to gather information. The internet is also a great resource for gathering data on different loan options, rates and banks that may serve your needs. There can never be too much information gathering when preparing for financial decisions. By thoroughly researching you refinancing or loan consolidation options it may be possible to save a considerable amount of money with a lower monthly payment that would have been paid in student loan interest
When choosing a company to refinance your student loans, by certain to look into these companies to be assured they are competent and reputable to handle you finances. A good place to start is with the Better Business Bureau, be attentive to their terms,  interest rates and any fees that they may charge. look for a company that actually specializes in student loan refinancing so that they will be experienced and capable of  any help you may need.
If you find it necessary to refinance student loans, an option that is often unknown to many graduates, be assured that there is an excellent chance that you will immediately see a savings that could ad up to thousands of dollars over the life of the loan and save your credit.

Student Loan Refinance

How do I get a consolidation loan?

• FFEL Consolidation Loan—You (or your parents, for a FFEL PLUS Consolidation Loan) can contact the consolidation department of a participating lender or a debt consolidation service for an application and more information. If the [ad]same FFEL loan holder holds all the loans you want to consolidate, you should obtain your debt consolidation loan from that loan holder.

• Direct Consolidation Loan—You (or your parents, if they want a Direct PLUS Consolidation Loan) can contact the Direct Loan Origination Center’s
Consolidation Department at 1-800-557-7392, or go to www.loanconsolidation.ed.gov. TTY users may call 1-800-557-7395.

To try and consolidate student loan, you must consolidate at least one Direct Loan orone FFEL Loan. (For example, if you have only Federal Perkins Loans, you can’t get a consolidation loan.) If you don’t have a Direct Loan, but you have an FFEL Loan, you must first contact your FFEL lender about getting a FFEL Consolidation Loan, before contacting the Direct Loan Consolidation Department consolidation loan? Currently, the interest rate for both Direct and FFEL Consolidation Loans is a fixed rate for the life of the loan
(unlike Direct and FFEL Stafford Loans, which have variable
interest rates). The fixed rate is based on the weighted average of the
interest rates on all of the loans you consolidate, rounded up to the nearest one-eighth of 1 percent. The interest rate will never exceed 8.25 percent for student loans and 9.0 percent for PLUS Loans.

Are there any disadvantages to getting  a consolidation loan?

Yes, there could be. For example, consolidation of debt significantly increases the total cost of repaying your loans. Because you have a longer period of time to repay, you’ll pay more interest. In fact, consolidation of debt can double total interest expense. So, compare.

Once made, a college loan consolidation cannot be revoked for any reason (e.g., because the applicant divorces or changes his or her mind, etc.) because the underlying loans that were consolidated have been paid off and no longer exist.

Student Loan Repayment

Student Loan Repayment can be a challenge and a stressful task for most college students after the college years. Unfortunately most do not realize there are ways to lessen the immediate burden of student loans. Many ask themselves – Do I have repayment options?

[ad] Yes. The repayment periods for Stafford Loans vary from 10 to 30 years depending on whether the loan is a Direct or FFEL Stafford Loan and depending on which repayment plan you choose. When it comes time to repay, you can pick a repayment plan that’s right for you:
• A 10-year Standard Plan with a minimum monthly
payment of $50;
• An Extended Plan that allows you to repay your loan
over a longer period;
• A Graduated Plan with a monthly payment that starts
low and then increases gradually during the repayment
period; or
• A plan that bases the monthly payment amount on
how much money you make. Under Direct Stafford
Loans, this plan is called the Income Contingent

Under certain circumstances, you can receive periods of deferment or forbearance, during Student Loan Repayment period, that allow you to postpone loan repayment. These periods don’t count toward the length of time you have to repay your loan. You can’t get a deferment or forbearance for a loan in default.
What is deferment?

A deferment is a period of time during which no payments are
required and interest does not accrue (accumulate), unless you
have an unsubsidized Stafford Loan. In that case, you must pay the interest.

How do I qualify for a deferment?
The most typical loan deferment conditions are enrollment in
school at least half-time,* inability to find full-time employment
(for up to three years) and economic hardship (for up to three
years). Other deferment conditions are loan specific.

What is forbearance?
If you temporarily can’t meet your repayment schedule but you’re not eligible for a deferment, your lender might grant you forbearance for a limited and specific period of time. Forbearance occurs when your lender or loan-servicing agency agrees (in writing) to either temporarily reduce or postpone your student loan payments. Interest continues to accrue (accumulate), however, and you are responsible for paying it, no matter what kind of loan you have.  Generally, your lender can grant forbearance for periods up to 12 months at a time, for a maximum of three years. You’ll have to provide documentation to the lender to show why you should be granted forbearance.
Applying for deferment or forbearance
Receiving deferment or forbearance is not automatic. You or your parents must apply for it.

• Federal Perkins Loans—Contact the school that
made your loan or the school’s servicing agent.

• Direct Loans (includes Direct PLUS Loans)—Contact
the Direct Loan Servicing Center at 1-800-848-0979.
TTY users should call 1-800-848-0983. Or, go to www.dl.ed.gov.
• FFEL Loans (includes FFEL PLUS Loans)—Contact the lender or agency holding your loan.

Regardless of which type of federal student loan you have, you must pay the interest that accrues (accumulates) during any period of forbearance a point to remember when planning Student Loan Repayment.

from federalstudentaid.ed.gov