Federal Student loan consolidation Made Easy

Federal programs

There are two federal student loan consolidation programs in the United States that allows the student to consolidate all student loans into one single loan:

1. the federal family education loan Program
2. the federal direct student loan program

the above two programmes have been established to deal with these types of loans:

* Stafford loans
* And a loan
* Perkins loans

Offer a fixed interest rate for the entire life cycle of the loan is one of the main characteristics of the consolidation loans from the Federal Government, aimed at students.

A brief history of the Federal program

Federal student loan consolidation program was created in 1986 to graduates with more federal loans is to unite all in one package for a single loan. The consolidated loan has a variable interest rate from 1986 to 1998, but in 1998, THE US Congress has acted to variable rate to convert to a single fixed rate weighted average. It entered into force on 1. February 1999. Before this time the consolidated student loan from the Federal Government for Variable speed. This rate was determined by the University or the creditors, he who is the originator of the loan.

In 2005, the Government has assumed the responsibility of the Office (GAO) on the level of savings, the consolidation of all consolidation loans. On the basis of future changes in interest rates, the volume of credit, a percentage of the default values, and the cost estimates of the Department of education, the GAO concluded that it would cost an additional 46 million dollars. GAO also concluded that these costs should be offset by the savings of millions of dollars, the fee that was partly by avoiding the cost of US $ 2 500 million in subsidies.

The interest of the consequences of the

In comparison with the student loans offered by the Federal Government, the longer the term of payment for a federal consolidation loan. This may be in the range from 10 to 30 years. Although the monthly payments are lower, the total cost for the duration of the loan is in fact higher than with other federal student loans.

Fixed interest rate is derived from the use of a weighted average interest rates of the consolidated loan. This is done so that you assign a relative weight according to the amount borrowed and then rounded to the nearest 0.125%, but limited in 8.25% interest. Post-graduation grace period, and forgiveness, special circumstances are two features of the original loan, which have not been transferred to consolidation loans.

I don't rush things to decide

If you have an existing loan, which will become a significant money, do not despair. Consolidating your loans may be the way to go. However, it is important to appreciate the fact that the Federal student loan consolidation is not always appropriate for each debtor with the payment of federal student loans.