Consolidating your private student loans or any student loans for that matter can make financial sense if you get a better rate of interest and your term of the loan remains unchanged or better is reduced. This is a crucial factor in deciding if consolidating your loans is worth it and if it makes financial sense.

If however your consolidating company offers to lower your monthly payments but increase your repayment term then purely from a financial perspective this does not make it a good deal for you. You don’t know have to know much about loans to understand what this means – the longer you stretch your repayment, the more interest you pay on your loan.

For the sake of argument, let’s assume that you are hoping to consolidate $30,000 of private loans that will enter a 10-year repayment at 8.9% interest. Right now, you would be looking at 120 payments of $378.41 a month. Consolidate that $30,000 into a 20-year loan at the same interest rate, and your payment drops to $267.99 a month – a savings of $110.42 a month. I’m sure you could put that extra $110 to good use.

But here’s the catch – over 10 years, your total payments will be $45,408.36. How’s that compare to 20 years, where your total payments will be $64,318.53?

What’s the privilege of cutting your monthly payment by $110 going to cost you? $19,000. Wow, that’s the list price on a Honda Civic, a Mini or a Pontiac G5.

Make that same deal on your government loans, and you’re looking at another $15,000 in extra interest. That’s quite a lot to pay. Before you consider consolidation, take a look at your lender’s other options, including Income Contingent Repayment, extended repayment, graduated repayment, and the brand new Income-Based Repayment. Do the math, and see which of these might make the most sense for you.

Don’t be in a hurry to consolidate or consolidate for the sake of it, there are several options available to you and unless you do your due diligence, it will prove to be a very costly decision.

There are many misconceptions when it comes to age and student loans. How old should you be to apply for a private student loan? The short answer is, you have to be 18 years. Most states have laws that stop minors from applying for a student loan if they are under 18 years. Even if you are 18 years, you will find that banks or private institutions will insist on a cosigner for your student loans. The basic two requirements are that you have to be atleast 18 years and you have to be a student of course for a student loan.

Government Grants are a slightly different story. You do not need to be 18 years old to get a government grant such as a Pell Grant or a Stafford grant. But you need to have a high school education or its equivalent to qualify for federal aid. Fill out your FAFSA form to start the process for getting a federal student loan irrespective of your age.

We get many questions and queries around this subject and figured we post some out there.

• “I’m not yet eighteen, can I get a student loan?“
• “How old do I have to be to get a Pell Grant”
• “Can I get a federal student loan if I am in my thirties?”
• “Are there any age restrictions on getting a student loan or grant”
• “i know someone who is 29 and has completed 2 years of college then quit. Can he be qualify for a grant if he fills out a fafsa form? If not is he eligible for a student loan”

Getting a student loan, whether a private or a federal student loan is a long drawn out process. That said, exhaust all your options before even considering a private student loan.

Understand the difference between a consolidation loan, a debt management program, and debt negotiation. Companies that claim to be able to help you lower your payments or get out of debt quickly may appear to be offering consolidation loans–they may even have the word “consolidation” in their names–when in fact they use methods such as debt management, settlement, or even bankruptcy. There are major differences between these options.

What is a Consolidation Loan?

A consolidation loan is simply a loan that pays off your other loans. Once you consolidate a loan, you owe that money to the new lender, not to the original creditor. A consolidation loan may lower your monthly payments, either by reducing your interest rate or by extending the length of time for repayment, but it pays off the other creditors completely. Consolidation loans may temporarily blemish your credit, but generally to nowhere near the extent of debt management programs or debt negotiations.

Debt Management

Debt management programs may also reduce your payments, but they work differently. A debt management agency acts as a middleman between you and your creditors and tries to negotiate a reduction in the interest rates or fees on your loans. You then pay an agreed amount to the debt management or credit counseling agency, and they disburse the payment (usually minus a fee) to your creditors. Participation in a debt management plan usually shows up on your credit report, and may adversely affect your credit rating.

Debt Negotiation

Debt negotiation is the act of settling a debt for less than what you owe. You pay a part of what you owe to a creditor, and the creditor writes off the rest of the debt. Credit card companies often offer lump-sum settlements as a way to recoup part of their losses. While you end up owing less, a settlement will bruise your credit, badly. Worse still, third-party companies that offer debt negotiation have been known to disguise their practices as consolidation, and these companies frequently charge exorbitant fees while simply passing along payments to your original creditors, sometimes failing to even negotiate any difference in your repayment terms.

In order to consolidate your loans, ALL you have to do is call the LENDER (whatever bank you took it from). If you don’t know, you can call the financial aid office at the school where you took out the loan and ask them the name of bank.

Below are the steps you need to take to refinance your student loans. This is after you have consolidated your student loans

1. Make sure your credit is in good standing. This is essential for getting more favorable terms.
2. Get a copy of your free credit report. This can be achieved online through one or all of the three major agencies, such as Equifax, Experian and TransUnion. Review it and make sure to fix any problems.
3. Consolidate your federal loans and private loans separately. Compare rates from different lenders. Shop around, check the Internet, your bank, as well as your original lender.
4. Work with your lenders to refinance your loans. Extend your repayment period, lower your interest rate or consolidate your payments into one monthly bill according to your needs.
5. Research your options. You can consolidate private loans and federal loans together, but this usually yields less favorable terms.

I hope this gives you an idea what to expect when you refinance or consolidate or do them both. Good luck !!

There used to be a time when married couples could consolidate their individual student loans. However that is no longer possible. I believe since 2006, this provision has been withdrawn and you no longer can consolidate your student loans with your spouse. Why? Well, should you consolidate your student loan with your spouse then both of you are now responsible for the loan amount and in the event of the marriage dissolving it becomes difficult for the loan to be split.

With this in mind, federal consolidation of spousal student loans is no longer an option. We get many questions asking if consolidating his or her loan with their wife or husband is possible. Below are a sampling of these questions

• “My wife and I are due to graduate from college very shortly, will we be able to consolidate our student loans into one loan or will we have to each consolidate individually?”
• “Can both me and my spouse consolidate our loans to one single loan?”
• “How can I get the best rates? I plan to consolidate all my loans with my wife”
• “Can you tell me the best consolidation company where me and my husband can consolidate our student loans?”
  

‘Refinancing’ your student loans is done using the Federal Consolidation Loan Program. The Dept. of Education licenses various lenders to participate in the program. The process is pretty simple and straightforward. You have two options either apply online or call a lender directly. Either way they’ll collect:

1. Name, Address, Phone, Social Security Number
2. List of loans you would like to consolidate (they will walk you through your loan file for you to let you know what is available)
3. Two References

Once that’s complete the lender will let you know what your payment options are and you can either sign electronically or through the regular mail. All in all it should take no more than 10-15 minutes.

If you are trying to consolidate PLUS loans that were used for your education, if you did not sign for the loans (a parent or cosigner) the Dept. of Education requires their signature for those loans. A lender will be able to walk you through how its done.

I am thinking of becoming a LPN and was wondering how long is the education required to become one. I am looking at a community college nearby. How long does it approximately take to become an LPN in a community college?

It’s great to hear you are seriously considering becoming a Licensed Practical Nurse (LPN). Most LPN courses and LPN training offered usually run anywhere between 12 – 18 months. Sometimes you have colleges that have an associate degree that might take close to 2 years but that will also include any hands on training that is required to become a LPN.

One other career option you might want to consider is to do an additional 12 – 18 months and become a registered nurse. Nursing is in great demand and there is a lot of pent up demand for LPN’s, CNA‘s and RN‘s. In the scheme of things becoming a RN will open more doors for you as well as increase your long term earning. Good luck

A common question that we are often asked is I have several Student Loans out, and I’m supposed to begin repayment soon. I’ve heard that if I consolidate my student loans, it can lower monthly payments, and it puts them at a fixed interest rate. Is this right? How do I go about getting my loans consolidated? Is it hard to qualify for it? Do I have to have full-time employment before I consolidate? Lastly, has anyone ever heard about student loan interest being tax deductible?

Let’s start with the easy ones, first

First of all, I’m assuming that you are receiving statements from one or more loan companies every month. If not, you must at least be receiving a statement from one (or several companies) in January of each year – that’s when they send you a summary. The first thing you’ll need to do is find all of these statements and look them over.

Many of the actual lenders may not be contacting you directly, because it’s very common for lenders to use another type of company, called a “loan servicing agency” to help them stay in touch with you. The largest loan servicing agency, and one that you’re almost certainly dealing with is a company called “Sallie Mae”. Check and see if you have correspondence from Sallie Mae.

When you have found as many of the statements as you can, you can call the customer service number on your statements for more information, particularly about your loan balances.

You should also have copies of the “Promissory Notes” that you signed every time you agreed to a new loan. The lenders are required to send you a copy, and you should have kept these in a very safe place, because these are the legal contracts that you signed – the terms of the loan(s). Each promissory note will tell you how much the loan is for, and they’ll also tell you how much you will eventually have to pay back on each loan.

As for consolidation – this is a very complicated lending question that I would REALLY REALLY REALLY recommend that you discuss with a knowledgeable financial advisor. Your mom and dad are fine if they know a lot about loans and interest rates and repayment schedules and things like that, but if they’re also a little intimidated by loans, you should make an appointment to speak to a family friend, or an accountant, or a loan officer at your bank.

Consolidation loans are promoted with the “pitch” that they make your life easy by allowing you to take a bunch of loans from different lenders and gather them all together into a single loan with just one lender and one payment. They are also “sold” with the suggestion that consolidation can save you a lot of money by lowering your monthly payment.

Whether a consolidation loan is right for you depends on a lot of factors that the consolidation lenders don’t always tell you about in their ads and emails. You asked me to keep this simple, so I won’t go into a lot of detail about what those factors are.

Just keep a few things in mind:

Consolidation loans do not cut your monthly payments because they are “nicer” loans. Consolidation loans cut your monthly payments because you will make many, many more payments over a longer period of time.

Suppose you owed me $100 and promised to pay me back $50 a week this week and $50 a week next week. Your car broke down and you had some other bills due, and you come back to me and say that you can’t pay me the $50 this week – is there any way we can make another arrangement?

“Oh, absolutely.” I say. “Let’s do this. Instead of paying me $50 the next two weeks, you can pay me $10 a week for the next 15 weeks.” You think “Wow, only $10 a week. That’s much better than $50. I can afford that!”.

But look what’s happening – I’m not just being ‘nice’. You’re only going to pay me $10 a week now, but you’ll be paying me $10 a week for the next 15 weeks. What’s that mean? It means you’ll be paying me back $150, not the $100 that you originally owed me. I did you a “favor” by letting you pay me less, but we stretched it out over more weeks, and you wound up paying me a lot more for the “privilege”.

That’s how a consolidation loan works – your payments will go down, but you’ll pay the loan for a lot longer and you’ll almost certainly wind up paying a lot more in the end.

That’s why I say – make sure you understand just how much it’s going to cost you to make lower payments for a longer time. Then decide if the consolidation loan is worth it for you.

It might be, but it might not.

Good luck!

In general, you can’t simply “get rid of” your student loans. Repaying your student loans will continue to be your responsibility and there are no easy answers for anyone looking to shake off this burden.

It isn’t exactly possible to “negotiate” a lower payoff, but it is possible to arrange an alternative payment plan — some of these plans require very minimal payments for your first few years of repayment. Among the plans to ask your lender about: interest-only repayment; graduated repayment; income sensitive/contingent repayment, extended repayment, etc.

Federal Loan Consolidation is often the fastest way to lower your monthly payment and, sometimes, even your overall costs. It’s a good option for borrowers looking to extend their repayment term which, in turn, lowers the monthly payments, often significantly.

Will filing for bankruptcy get rid of my student loans?

Federal Stafford Loans cannot be forgiven, even if the borrower files for bankruptcy. Perkins Loans can sometimes be forgiven/cancelled/discharged when the borrower has filed for bankruptcy. However, I DO NOT recommend filing for bankruptcy on the off-chance that your Perkins might be discharged. It generally does more harm than good.

The only legal way to get rid of your student loans is through a Loan Forgiveness program. If you work for 5 years as a teacher in a low-income or subject-shortage area, all of your Perkins Loans and some of your Stafford Loans can be forgiven. Teaching is pretty much the only way to have your Stafford loans forgiven, but if you have Perkins Loans, there may be other careers such as law enforcement, corrections officers, those in the HeadStart program, early intervention service providers, PeaceCorps and ACTION volunteers, nurses, military personnel etc. can all have their Perkins Loans forgiven in part or in full. We’ve explained this a bit more in our article on how to get rid of student loans legally.