Student Loan Consolidation Lowdown

The teen years are a time to experiment. So, if you feel like doing drugs, it is probably your urge to experiment. But if you are serious about making it through college, then it is best to let go of this one urge. It is just a small step from trying it a few times to becoming addicted and then you may end up having a run up with the law — something that could jeopardize your chances of getting a loan in college.

According to recently released research, over 31,000 California college students forfeited their shot at federal financial aid because of a past drug conviction. Last year, 2,219 Californian students were denied federal financial aid because they admitted to a prior drug bust. While this is discriminatory, and possibly the restrictions will be loosened, you still probably need to be careful for the time being. The revised law renders students ineligible for one year following their first conviction for drug possession. Students convicted of selling drugs would lose eligibility for two years. Multiple convictions can lead to a permanent ban.

Two weeks from now and the second largest interest rate hike in the history of the student loan program will take effect. Federal student loan interest rates will increase almost 40 percent for students and 30 percent for parents July 1, meaning the new fixed rates for new Stafford loans will be 6.8 percent and 8.5 percent for PLUS (Parent Loan for Undergraduate Student) loans. Mariettatimes.com reports:

New rates for consolidation after July 1 will rise to 6.625 percent for consolidated loans made up of Stafford loans in grace or in-school deferment and 7.25 percent for Stafford loans consolidated during repayment. Currently, those rates are 4.75 percent and 5.375 percent.

Read more: It’s not too late to beat student loan rate hikes

Most students, graduates and parents are bogged down with a big financial problem this month. They have no idea how to deal with the big rise in interest rates that will soon hit their federal student loans. Nytimes.com reports:

Students with a large debt burden who need relief as they start their working lives would benefit most from consolidating. Students should balance their debt against their expected income and their ability to manage money, and should look at other options offered by lenders, like plans with payments pegged to income levels.

Read more: Hard Choices as Loan Interest Rates Rise

I’m sure most of you are bone-tired of hearing that it’s a now or never time for consolidation. And you are probably in a flurry and want to do it as soon as possible. But remember the lessons we learnt in childhood? Slow and steady wins the race! Well, this is a prime example of how trying to speed up things could mean a world of difference. The best way to consolidate and get the best deal possible is to do it slowly and thoroughly.

It is important for you to check around, and ask many questions before you choose the loan that’s right for you. And the most important question you need to ask even before you begin shopping is: Do you need to consolidate? Not everyone needs to so it is important that you do your math properly and find out if consolidation works for you. If it does, then you can move on to the next step.

If your need is to stretch out the repayment period or lock in the prevailing rates, then you definitely need to consider consolidation. So, if Sallie Mae holds the majority of your loans, then it is best to approach them first.

However, if you are still confused, then it is best that you meet the financial-aid officer at your school and work out your options. So once you’ve worked out all the pros and cons of consolidation and decided to go for it, then the next most important step is choosing the best lender.

But don’t forget, you have very little time left. The clock’s ticking and July 1 isn’t too far away!!

Bogged down by rising tuition fees and don’t know which way to turn? This is an extremely painful situation and the timing couldn’t be worse. I mean, here you are thinking of the rising cost of education and just about everyone is screaming consolidation from the rooftops. Well, if you do think of putting that upcoming tuition bill on a credit card, just check with your university before you try to do so. Many universities now impose additional fees on students and parents who pay by plastic. Some of them even refuse to accept certain credit cards altogether.

Universities have to incur increasing costs in processing credit card transactions. Like merchants, universities and colleges are charged a fee every time a credit card is swiped. Usnews.com reports:

"When you charge $20,000 or more, the consumer loves it because they get points or miles or some sort of benefit," says Jon Speare, codirector of the Treasury Institute for Higher Education, which offers financial advice to colleges and universities. "But it’s a very high fee for the actual school."

Read more: Colleges clamp down on credit card tuition payments

According to a recent report, the average college student will owe $19,300 by the time they graduate, and nearly two-thirds of students who graduated in the 2003-2004 school year used loans to pay for the cost of college. And the worst part is that college tuition increases have far outpaced federal grant increases over the past several years. Citizensvoice.com reports:

On top of college loans, too many students use credit cards indiscriminately while in college, said Terri Stocki, an adviser with Consumer Credit Counseling Service of Northeastern Pennsylvania. “They’re in debt before they even start,” said. “I’m not sure what the answer is there. I don’t know where it’s going to end. The prices are going up and up.”

Read more:College graduates carrying high student loan debt

The countdown’s begun and you have less than 30 days to take a decision. Of course, as they say, consolidation is not for everyone and you have to weigh the options available to you before you decide. However, if you do think you need to consolidate your loans, then don’t think much longer — you cannot afford that privilege any longer. College students and graduates—and their parents—have until June 30 to save themselves thousands of dollars on their outstanding educational loans.

If you have already taken federal educational loans, you can still benefit. All you need to do is take advantage of a certain legal quirk that allows debtors to lock in last year’s low interest rates before they jump by almost 2 percentage points on July 1. If you are still in school, you can cap payback rates on loans you’ve already taken out at a fixed rate of no more than 4.75 percent. If you let your existing loans continue to fluctuate with treasury rates, you’ll be charged 6.5 percent starting July 1.

Student-loan giant Sallie Mae and other lenders recently hiked rates about 1.84 percent for the coming fiscal year on two key programs: Stafford loans and PLUS loans. The steeper rates will translate into higher monthly payments for borrowers. Bostonherald.com reports:

Sallie Mae Vice President Pat Scherschel said rates shot up over the past two years because the Federal Reserve has been tightening credit in a bid to prevent inflation.

Read more: Debt by degrees: Feds to hike student loan rates

The countdown’s begun and you have less than 30 days to take a decision. Of course, as they say, consolidation is not for everyone and you have to weigh the options available to you before you decide. However, if you do think you need to consolidate your loans, then don’t think much longer — you cannot afford that privilege any longer. College students and graduates—and their parents—have until June 30 to save themselves thousands of dollars on their outstanding educational loans.

If you have already taken federal educational loans, you can still benefit. All you need to do is take advantage of a certain legal quirk that allows debtors to lock in last year’s low interest rates before they jump by almost 2 percentage points on July 1. If you are still in school, you can cap payback rates on loans you’ve already taken out at a fixed rate of no more than 4.75 percent. If you let your existing loans continue to fluctuate with treasury rates, you’ll be charged 6.5 percent starting July 1. Usnews.com reports:

Those who don’t consolidate will have to fork over some serious coin. The average student borrower graduates with about $20,000 in debt these days. Graduates who don’t consolidate will very likely see their monthly payments jump from today’s $216 to $233 in July. At that rate, the graduate would pay $2,140 more over the typical 10-year life of a loan.

Read more: You can cut your student loan costs