Federal Student Loan Consolidation Made Easy

Consolidation federal loan program 

Consolidating student loans is not difficult. Ideas on how to combine student loans easy to follow. There are two Federal Student Loan Consolidation programs in the United States that allows students to consolidate all direct student loans into one loan: 

Federal Family Education Loan Program 
Federal Direct Student Loan Program 
At the top of the two Student Loan Consolidation Program was created to handle the following types of credit: 

Stafford Loans 
PLUS Loans 
Perkins Loan 
Offering a fixed interest rate loan for the entire life cycle is one of the key characteristics of the Federal Student Loan Consolidation. 

A Brief History of Federal Program 

Federal Student Loan Consolidation Program was created in 1986 to enable graduates with more than one Federal Student Loan to consolidate them all into one loan package. As the consolidated loan has a variable interest rate from 1986 to 1998, but in 1998, the United States Congress to act to convert the value of the variable to a fixed rate average. The latter came into force on February 1, 1999. Before this, the Federal Consolidated Student Loan used to assess variables. Rates are determined by a university or lender, who is a loan originator. 

In 2005, the Government Accountability Office (Gao) increase in, under consideration to take the entire savings of the consolidation loan consolidation. Based on future variations in interest rates, loan volume, default percent and cost estimates from the Ministry of Education, Gao akan concluded that this additional cost of $ 46 million. Gao also concluded that this cost will be offset by savings of $ 3100 million which is in part to avoid that by $ 2,500 million in subsidy costs.

Implications of interest 

When compared with the Federal Student Loan, the term of payment for Federal Consolidation Loan this again. Range can be anything from ten to thirty years. Although the monthly repayments low, the overall cost of the loan term is actually higher than with other federal student loans. 

Fixed interest rate that comes from using the average of the consolidated Federal Student Loan interest rates. This is done by the relative weight assigned by the amount of the loan and then rounded to the nearest 0.125%, but capped at 8.25% interest. Post-graduation grace periods and special forgiveness circumstances are the two features of the original loan that has not been brought to the consolidation loan. 

In closing, student loan consolidation can be easy but it is important to appreciate the fact that the Federal Student Loan Consolidation is not always suitable for every borrower's Direct Student Loan.