Deadline for Special Federal Student Loan Consolidation Offer Nears
This is a guest post from Suzan Bekiroglu.
For many students with federal student loans, consolidation can be a great way to save money on both the amount of the interest rate and on the monthly payment. However, few students really understand how the consolidation process works or how it can benefit them.
Federal loan consolidation is a process in which a bank takes a former student’s direct loans and bundles them together as a single loan with one payment. This new loan can have a lower interest rate than the previous loans, and a longer payment term if desired.
Loan consolidation is a great way to get some relief on student loan payments. Many recent graduates feel trapped by the high amount of debt they have taken on. A typical graduate has nearly $24,000 in student loans for a Bachelor’s degree. In this harsh job market, many of these former students are considered to be underemployed; that is, they are working part-time and/or below their skill level. This means that many students are not making enough money to meet the minimum obligation on their student loans.
To make matters worse, many people do not discover until it is too late that they cannot discharge their student loans in a bankruptcy. Unlike practically every other type of debt, a person who cannot pay their student loans has no way of legally getting rid of them. This means a borrower has to find some way to make their payments or risk having their wages, tax refunds, and even their Social Security checks garnished. Student loans are a great way for a former student to lower their debt burden without running the risk of legal trouble
Fortunately, there is currently a special federal consolidation offer to help struggling borrowers. Anyone considering this option, however, should act quickly. June 30th is the deadline for this special program that will allow borrowers to lower their interest rate. Through this consolidation program, a borrower will be able to stabilize their interest rate and their monthly payment. By going through direct loan consolidation, a borrower will be able to know what their monthly payment will be until the end of the life of his or her loan. Knowing that your payment will not rise is crucial to being able to pay back student loans.
The Obama administration is offering this loan consolidation program only to people who qualify. Letters to all students who qualify for the program were sent in January of 2012. If you think that you may qualify and did not receive a letter, you can find out more information through your loan servicer and through the Federal Student Aid website.
If you are currently facing the possibility of not being able to pay your student loans, consolidation may be a good option for you. Be sure to research this option carefully, however, since borrowers are only allowed to consolidate their direct loans once. Consolidation is an important decision that can help you to become more financially independent and get your student loans finally paid off.
Ms. Bekiroglu is a published author, freelance writer and editorial consultant for secureloanconsolidation.com. After receiving a Bachelor of Arts degree from the University of South Florida, she faced the mounting obstacle of paying over $24,000 back in student loan debt. Determined to eliminate the debt, she became knowledgeable about money management. She seeks to educate others with tips on managing student loans and other kinds of debt, as well as in general personal finance and money saving tips.
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