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The price of higher education has continued to rise even as the importance
of furthering one's education has skyrocketed. As a result, more students
and graduates are incurring student loans. For these individuals,
government student loan consolidation offers one option which may
reduce their burden in some circumstances.
Government
Student Loan Consolidation: Who's Eligible
All students with federal
student loans are eligible for government student loan consolidation.
However, some requirements must be met in advance. First, the student
must have more than one federal student loan. If he or she only
have one now, then consolidation is unnecessary. Second, students
must be in good standing with their loans. That means the student
must either still be in his or her six-month post-graduate grace
period or have made three full monthly payments on time for each
of the loans being consolidated.
Both subsidized and unsubsidized student loans can be consolidated.
According to the Federal
Consolidation Loan Information section of the Carnegie Mellon web
site, however, those loans will be consolidated in two separate
loans so that lenders can monitor them separately as they are required
to do by law. Despite that, the payments for those loans will be
combined so the student still only pays one payment per month.
Government
Student Loan Consolidation: Repayment
Loans consolidated through government student loan consolidation must still be repaid. One of the advantages of consolidation, however, is that the repayment period is often extended so students have longer to pay off their loans. That means students will need to make lower monthly payments. Maximum repayment periods for consolidated loans vary from 10 to 30 years depending on how much is owed. The cost of the monthly payments depends on the repayment period, total loan amount, and interest rate.
Students should keep in mind that while a longer repayment period
and lower monthly payments can be useful now they will end up paying
more in the long run because of the additional accumulated interest.
References and Links
To learn more about government student loan consolidation, read
"Student
Loan Consolidation Programs", "Student
Loan Consolidations," or "A
Primer on Loan Consolidation".
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