Friday, March 14, 2014

Student Loan Consolidation

A student loan consolidation assists the borrower in meeting repayment obligations, allowing consolidation of their loans into one, low, monthly payment. Consolidating student debt is not your only option. Options available to borrowers include deference, forbearance, and loan forgiveness. Some lenders may work with a borrower to set up multiple repayment plans.


Q:   What are my consolidation options if I already have combined some of my loans during medical school?

A:   If a borrower consolidated his or her school loans while still in school, then the borrower is eligible to reconsolidate those loans with bans that were obtained after the original consolidation. The interest rate of the new consolidation would be the weighted average rate of the previous consolidation and the new loans disbursed after the original consolidation.

How Does A Student Loan Consolidation Work?

When seeking to consolidate student loan debt, students, and graduates alike, have two main options to choose from, private student loan consolidation or federal student loan consolidation. A private student loan consolidated loan can be acquired through banks, credit unions, and other financial organizations. A Stafford Loan, PLUS Loan, and Federal Perkins Loan can be consolidated through the Federal Family Education Loan Program (FFELP) and the Federal Direct Student Loan Program (FDLP).

In order to keep your payment low, a consolidated loan often entails a lengthy loan term, usually no less than 10 years and no more than 30 years. And while your monthly payments may be lower after consolidating your student debt, you will most likely find that your total amount paid will be higher over the term of the consolidated loan than it would be with your current loan.

The amount of student loan debt you wish to consolidate may be more than the amount federal loans are willing to cover. In the event that you cannot consolidate your entire debt under a federally run program, you may have to turn to a private loan provider such as Sallie Mae Signature, Citibank, Chase, or Bank of America.

In addition to these well known and recognizable lenders, there are many web-based companies that provide private student loan consolidation services, including,, and

What Should Students Know Before Applying for A Student Loan Consolidation?

As a savvy consumer, it is your job to check the current interest rates offered by all organization that offer student debt consolidation. Chances are that a federal student consolidation loan will offer the best rates for those seeking low monthly payments; however, as mentioned, your entire debt amount may not be covered.

Student Loan Information that May Affect You

Student Loan Consolidation Center Student Loan Trust I Announces Expiration and Final Results of the Tender Offer – Based on information provided by the depositary for the Tender Offer, $71,600,000 in aggregate principal amount of Notes were validly tendered and not withdrawn in the Tender Offer. The “Tender Offer Consideration” payable in the Tender Offer for each $50,000 principal amount of Notes validly tendered (and not validly withdrawn) pursuant to the terms of the Tender Offer was determined pursuant to a “Dutch Auction” procedure in accordance with the terms set forth in the Offer to Purchase. Under the “Dutch Auction” procedure, each holder that tendered Notes in the Tender Offer specified a “Bid Price,” within a range of $41,500 to $44,500 per $50,000 principal amount of Notes, which represented the minimum consideration such holder was willing to receive for those Notes.

Fitch: Ongoing Student Loan Servicer Consolidation Should not Impact ABS Ratings – Fitch Ratings does not believe recent and expected student loan servicer consolidation will have a material effect on the performance of Student Loan Asset Backed Securities (SLABS) or existing ratings. Recent servicer consolidation was expected because of the recently passed health care legislation that included provisions for the discontinuation of the Federal Family Education Loan Program (FFELP) in favor of the new federal government Direct Loan Program (DLP).

On March 30, 2010, President Obama signed into law HR 4872, the Healthcare and Education Reconciliation Act of 2010. Included in the Act is the Student Aid and Fiscal Responsibility Act of 2009 (SAFRA) that ends the FFEL Program. As a result, effective July 1, 2010, all federal student loans will be provided directly by the federal government through the DLP.