Federal Consolidated Student Loans

National Defense Education Act (NDEA)

The NDEA was established in 1958 to help pay college educations for students who were enlisted or drafted into the military service. Originally set at 2 years, it was extended indefinitely in 1972. In 2010, the federal government stopped subsidizing student loans if borrowers have reached a certain amount of debt. Private lenders still offer subsidized loans, but interest rates are higher than they are for non-subsidized loans.

Public Service Loan Forgiveness Program (PSLFP)

Through the PSLFP program, public servants may qualify for loan forgiveness after 10 years of payments. Eligible programs include teachers, police officers, firefighters, veterans, correctional officers, and other eligible positions.

William D. Ford Federal Direct Loan Program (Direct Loan)

This program offers direct lending between the U.S Department of Education and private banks. Borrowers do not need to apply directly to educational institutions. Instead, their financial aid forms go to the bank which then approves them and disburses funds directly into borrower’s accounts. These loans are not guaranteed by the federal government and therefore charge higher interest rates.

Federal Family Educational Loan Program (FFELP)

Established in 1965 in order to provide low-interest loans to undergraduate students attending colleges and universities. This is considered a subsidized loan program because the federal government essentially pays the interest while the student is enrolled. After graduation, borrowers have three options: 1) Repay the loan as agreed under the terms of the original agreement; 2) defer payment until after six months without any interest being charged; or 3) consolidate the loan with other federal loans.

William D. Ford Subsidized/Unsubsidized Graduate PLUS Loan Program

Graduate PLUS loans are offered to graduate students with exceptional or outstanding academic records. A borrower can receive either a subsidized or unsubsidized loan. If a borrower chooses the subsidized option, the interest rate is fixed at 6.8% for undergraduates, 8.25% for postgraduates, and 5.21% for parent borrowers. However, if a borrower selects the unsubsidized option, the interest rate varies according to the borrower’s income.

Perkins Loan

Perkins Loans are designed for undergraduate students with exceptional or outstanding academics. Students must meet specific criteria for eligibility including having a minimum cumulative GPA of 2.75 and making 60% or above on average for each term. Interest accrues at variable rates depending on the borrower’s level of education and whether he or she receives a subsidized or unsubsidiend loan.

Federal Supplemental Educational Opportunity Grant (FSEOG)

Students who demonstrate economic hardship may qualify for FSEOGs. To qualify, students must have received a Pell grant and have been working or currently work full time. Additionally, their annual household income cannot exceed $24,000.00. Students should submit a Free Application for Federal Student Aid (FAFSA).

Federal Consolidated Student Loans

Federal Consolidated Student Loans

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Federal Consolidated Student Loans

Mortgage rates have fallen significantly over the past year. In fact, they’re at their lowest level in nearly three decades, according to a report released earlier this month from Bankrate, a financial-services company. As a result, many millennials are finding themselves in a great position to take out student loans. But just how much do these loans amount to? Here’s what you need to know about federal consolidation loans.

How Much Do Federal Consolidation Loans Cost?

The average monthly payment for a federal consolidation loan is $0.50 per $100 borrowed. However, depending on interest rate and length of time you borrow, you could pay anywhere between $0.25 and $0.85 per $100 borrowed. There are four different types of federal consolidation loans, each with slightly varying terms and requirements.

Here’s What You Need To Know About Each Type Of Loan

Type 1: Direct Subsidized Stafford Loan

This type of loan lets borrowers use income tax money to get a subsidized student loan; if you make less than $65,000 a year, the government pays all of the interest on the loan while you’re enrolled. Borrowers who go to school full-time usually qualify for this type of loan.

Type 2: Direct Unsubsidized Stafford Loan

If you don’t meet the income requirement of the first loan, you might want to consider applying for this type of loan instead. This option gives you access to a higher amount of money, though, you’ll have to cover some of that cost yourself. If you make less than $60,500 a year (or $110,500 for married couples), then you won’t qualify for this option.

Type 3: Parent PLUS Loan

To qualify, you need to be either the parent or legal guardian of eligible students. Parents and guardians are responsible for the repayment of the loan, regardless of whether the borrower attends school or not. Even if you work and earn money, you still need to repay the loan. And unlike other types of federal consolidation loans that are forgiven after ten years, parents who cosign student loans must continue making payments until their children graduate college.

Type 4: Private Education Loans

These private education loans are funded independently from the U.S. Department of Education. Because of this independence, lenders may charge whatever they choose for these loans. Lenders are generally willing to offer lower interest rates on these loans due to fewer regulations. Still, though, you should seek out lenders that provide competitive rates.

What Are The Benefits Of Federal Consolidation Loans?

One of the best things about federal consolidation loans is that they let you obtain a variety of different financing options simultaneously. According to Bankrate, “the most popular combo loan includes a federal direct unsubsidized Stafford loan and a private education loan.” By taking advantage of both programs, you can get a low fixed interest rate on your Stafford loan, along with additional funding for tuition costs. Most importantly, when you consolidate federal loans, you’ll end up paying only one set of interest rates rather than two.

Federal Consolidated Student Loans

What are consolidated student loans?

A consolidated loan is a single payment that combines all of your federal student loans together. If you get a consolidation loan, you won’t have to pay back several different loans at once. Instead, you’ll make just one monthly payment. You may still need private student loans, but if you’re able to consolidate those, you could save money over time.

How do I know if my loans qualify for consolidation?

To find out if a consolidation loan is right for you, talk to a financial counselor who works with students. Your counselor can help you figure out whether consolidating your loans makes sense.

Is consolidating student loans good for me?

Consolidation isn’t the best choice for everyone. Even though you might save some money by taking out a consolidation loan, you’ll give up some important rights.

Can I take cash out of my student account while I’m working?

Once you’ve finished paying off your loan, you’re not allowed to withdraw any money from your federal student aid accounts. But keep in mind that you’ll still have to repay what you borrowed before you withdrew money. So don’t go withdrawing money after graduation until you reach your repayment plan deadline!

Do I have to use my lender’s loan calculator?

Yes, lenders will want to know how much you owe. They may even ask you to enter how many years you expect to work in order to get the lowest APR possible, although you really shouldn’t have to do that. Lenders should automatically calculate your interest rate based on your income and family size.

Are there downsides to using my regular loan calculator instead of my lender’s?

If you decide to use your regular loan calculator, remember that your calculations cannot be verified by outside parties. So if you end up getting a lower-than-expected interest rate, you might not be able to prove it was inaccurate. And if your lender doesn’t match your low rates, they might charge you extra fees.

When can I start repaying my loans?

You can start making payments on consolidated student loans as soon as you graduate and receive your bachelor’s degree. Repayment starts three months after your last class ends and continues for 10 years.

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