Federal Private Student Loan Consolidation

Higher education is an expensive affair. As a result, several students opt for student loans in order to fulfill their academic achievements.

There are two types of student loan categories available: the federal student loans and the private student loans.

A student can ask for a federal consolidation loan from various financial institutions each offering great loan packages. The federal student loan consolidation will help a student combine all his loans into a single one with a very low interest rate. Also the length of the payment term can be set according to his needs.

A student can apply for a federal consolidation loan at several companies and institutions such as: secondary markets, banks and credit unions.

The federal loan interest amount is tax deductible and that’s why it would be best not to mix federal and private loans. If the student does that, he’ll only lose its advantages offered by a federal consolidation loan.

The federal consolidation student loans offer the following beneficial features:

  • Interest rate: – the rates offered by the federal consolidation student loan is considerably lower than any other private loan plan.
  • Monthly payments: – the monthly payments are now affordable and won’t endanger your budget
  • Single loan: – each month you’ll have only one payment to make. Thus, students have numerous options to choose from when selecting a loan consolidation service, depending on the amount to be repaid and the monthly income.

There are four types of Federal student loan consolidation

  • Standard Student Loan Consolidation: This type of plan is suitable for students who can afford to pay a fixed amount per month. The interest rate would not be a big factor in huge student consolidation loans.
  • Extended Payment Plan: This type of plan is similar to standard student loan consolidation except it has a longer repayment period of between 15 to 30 years. The repayment period is dependent on the student loan amount.

  • Graduated Payment Plan: This type of plan is suitable for students still schooling and can only repay the student loan when they have a job after they graduated. The payment period is between 15 to 30 years.
  • Income Contingent Payment Plan: This type of plan is complicated and is based on the student’s income level over a period of years. It is also based on the family’s annual gross income, other loan amounts owed, other assets, mortgages etc.
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