For those with student debt, it is important to know about different types of student debt relief. One option is a federal student loan consolidation. A federal student loan combines all the federal student loans that borrowers have into a single new loan with a single lender with a potentially lower interest rate. With consideration, borrowers are likely to have a lower burden through consolidation because it allows them to keep track of a single loan and single monthly payment compared to paying multiple loans and different loan amounts each month. Student loan consolidation exists for both federal and private student loans.
There are several benefits to student loan consolidation. It is important to understand the benefits to help you make the best financial decision. Some of the benefits include:
Simplify your student loan finances. Borrowers find it easier to manage a single federal loan, a single lender and a single interest It allows borrowers to track their expenses and budget better each month easily.
Flexible Repayment Plans. Another benefit offered through consolidation are flexible repayment plans. Borrowers can learn and choose different payment plan options that best fit their financial needs. Some repayment plans can begin with payments that are as low as $0.00 a month depending on your income and what the government decides on your payment ability. Borrowers also have the peace of knowing that payment repayment plans options aren’t set in stone. If a borrower’s circumstance changes, it is possible for them to ask for a different plan that accommodates your financial situation. It allows borrowers to avoid default or paying late.
Loan Forgiveness might be possible.
Consolidation comes with potential loan forgiveness elements that may not have been available before consolidation.
1. If you pay your loan faithfully for 20-25 years, the remaining balance of your federal student loans may be forgiven. For some borrowers, that can be a sizeable balance forgiven.
2. The interest in the IBR repayment plan may be forgiven on the subsidized portion of your loans for the first three years. That is possible if the monthly payment is less than the interest accruing.
3. Consolidated loans are eligible for the Public Service Loans Forgiveness program.
Consolidation is a fresh start. Consolidation pulls default loan out of its status and places them in good standing. It is a fresh start option for many borrowers suffering under the burden of multiple loans and may have fallen behind. It is a second chance option for many people. In addition, these borrowers enjoy flexible repayment options that help them stay on track.
Students can apply for consolidation as soon as they have graduated school, left school or have dropped below six credits per semester. Student loans will need to show that it is not within full-time status and