Consolidating Student Loans from the Government - 4 Important Steps to Follow

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Student loans need to be repaid by borrowers along with interest, right after graduation. Federal loan consolidation is a great way to make student loan repayment easier, and repay according to a fixed rate of interest. All your student loans can be merged into a single monthly payment through consolidation. As these are not credit based loans, all that you need to do is fill up an application with one or other student loan lender, enter your student loan details and think about a proper plan of repayment. Once you get your loan approved, you will only need to pay on time every month. Know about 4 important steps that you must follow for student loan consolidation from the Government.

Start the consolidation process as early as possible

You have to calculate the amount of money that you owe exactly. When you drop under the half-time status or graduate from college, you will begin to receive repayment notifications from your lenders. Following any of these events, you have 6 months prior to beginning payments on your loans. Thus, it is essential for you to begin the consolidation process as soon as you can. Start by calculating the amount that you owe.

Know about your repayment options

You can find the income-contingent repayment plan being available for Direct Loan borrowers only. This depends on a percent of your income, with the minimum payment being 5 USD per month. The amount of payment increases every year as your income sees an increase. You can get a repayment period of up to 25 years. Once this time is over, the amount remaining on the loan is dropped off. It is essential for you to consider every repayment option and take a decision on which one suits your needs the best. However, you do not have to stick only to that plan of repayment. The plans can be changed once a year.

Look for a good consolidation lender

It is important to find a credible student loan consolidation lender with low rates of interest. You may choose to directly consolidate your loans through the federal government through the financial aid office in your school or by filling up a suitable application on the federal government website or by approaching a private lender to assist you with the consolidation of your federal loans. You may ask for recommendations from the financial aid office or use the internet to conduct your search for lenders. The rates of interest for federal student loans are mandated by the federal government. Naturally, irrespective of which type of lender you choose - federal or private - you can expect your consolidation of loans to be the same.

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Know about your loan interest rates

You can approach the financial aid office in your school to get all the required information about the kind of loans that you have taken along with the interest rates and the remaining balances on them. You can browse the National Student Loan Data System for the necessary information if you cannot find it from the financial aid office.  

Created16 Oct 2017
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