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Guide to Culinary Loan Consolidation
INDEX | General
Aid | Loan Types | Loan Consolidation | Do's and Don'ts
of Culinary Student Loans
CONSOLIDATION
Student Loan Consolidation- How does it work?
A consolidation loan allows you to combine all your federal student loans
into one payment. Consolidation loans have fixed interest rates that are based
on the weighted average of the interest rates on the loans being consolidated.
Consolidation may not be for everyone. You still need to go through the normal
background and credit checks. You also maybe required to forfeit certain "grace
periods" student loans give you. Consulting a independent financial advisor
would be beneficial before you decide to consolidate any loans. Current
information provided by the Federal Student Aid which shows you the current
interest rates are available at:
http://loanconsolidation.ed.gov/
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Stafford Loan Consolidation
Stafford Loans are a type of loan that can help you pay for college
they come in two different types.
Subsidized Stafford Loans: This loan is granted to you based on your specific
financial needs. When a loan is subsidized you are not required to pay any
interest on the loan whilst you attend school. The government will pay this
interest until you are done school and then interest will commence.
Unsubsidized Stafford Loans:
This type of loan is not based on your financial aid, you may apply for this
loan but it starts accumulating interest from the beginning even though you may
be in classes.
Two Different Stafford Loans?
College and university students find that Stafford loans will be dispensed to them both as subsidized and unsubsidized loans, meaning that part of the loan will be subsidized and part of it will not. As they move through college, this means that they are paying interest on the loans, or simply allowing the interest to build up over time.
How To Consolidate Your Stafford Loans:
Student loan consolidation can help you to combine the two types of loans into one low monthly payment that makes it easier and quicker for you to pay off your college loans. You have the ability to find a loan consolidation company, who will then work with you to take all of your Stafford loans, both subsidized and unsubsidized, and place them into one central loan that can then be paid off over time.
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No-Cost Student Loan Consolidation
This is where a company offers to take all your student loans
and consolidate them into ONE payment for FREE. No handling fee or costs are
involved. There are many benefits to take out this type of loan as your only
paying one company and sometimes you can end up with a better interest rate.
However, it can also work against you the interest rate may be higher then what
your paying now. When considering a no cost student consolidation make sure you
chose a company that is willing to work for you to get the best rates and as
quick as possible.
Still confused??
Example of Student Loan Consolidation:
If you were to have outstanding loans of $4,000 to one company, $7,000 to another, and $9,000 to a third, the student loan consolidation allows you to owe $20,000 to one company, rather than to three. This can save you money in the long run, as these companies also may be able to offer you a competitive interest rate, which means you will be paying less overall for your student loans in a shorter amount of time and to only one company.
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Private vs Federal Consolidation Loans - What's
the difference?
All though there isn't many differences between these two
there are some you should be aware of. The table below shows the differences
between the FFEL Program (which is private) and the Direct Loan Program (which
is federal)
FFEL Program
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Lenders - Banks, secondary markets, and credit unions.
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Loans accepted - Can accept all eligible loans from eligible borrowers, but are not required.
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Repayment Plans- Offers four repayment plans.
- Standard Repayment Plan.
- Graduated Repayment Plan.
- Extended Repayment Plan.
- Income - Sensitive.
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Repayment Plan (in which the monthly payment amount is set according to the borrower's income and loan debt)
Timing of consolidation. -
Borrowers can consolidate after they have left school and all of their loans are in grace or repayment.
Direct Loan Program
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Lenders - Federal government.
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Loans accepted - Must accept all eligible loans from eligible borrowers.
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Repayment Plans - Offers four repayment plans.
- Standard Repayment Plan.
- Graduated Repayment Plan.
- Extended Repayment Plan.
- Income - Contingent Repayment Plan (in which the monthly payment amount is set according to the borrower's income, family size, and loan debt).
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Timing of consolidation.
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Borrowers can consolidate while they are still in school.
They both have options to allow borrowers who have defaulted on their loans to consolidate those loans.
In general, neither of them charges prepayment penalties or origination fees, nor are credit checks or co-signers required. However, some private lenders may charge processing fees.
The base interest rate on your consolidation loan is the same regardless of the lender. However, private lenders may offer additional incentives such as a reduced rate if you make your payment on time and if you have your payment automatically debited from your bank account.
Just a reminder that if all your loans go through one company you must consult
them first before seeking a consolidation elsewhere. Again speaking to an
independent advisor can help you choose the right consolidation program for you!
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