Loan Rehabilitation
Loan Rehabilitation
You may want to consider rehabilitating your defaulted loan(s). Advantages of rehabilitation include:
* Your loan(s) will no longer be considered to be in a default status.
* The default status reported by your loan holder to the national credit bureaus will be deleted.
* You will be eligible for the same benefits that were available on the loans before the loans defaulted. This may include deferment, forbearance, and Title IV eligibility.
* Wage garnishment ends and the Internal Revenue Service no longer withholds your income tax refund.
If you are a Direct Loan Borrower:
To rehabilitate a Direct Loan, you must make at least nine (9) full payments of an agreed amount within twenty (20) days of their monthly due dates over a ten (10) month period to the U.S. Department of Education (Department). Payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward your nine (9) payments. Once you have made the required payments, your loan(s) will be returned to the Direct Loan Servicing Center.
If you are a FFEL loan borrower:
To rehabilitate a FFEL, you must make at least nine (9) full payments of an agreed amount within twenty (20) days of their monthly due dates over a ten (10) month period to the Department. Payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward your nine (9) payments. Once you have made the required payments, your loan(s) may be purchased by an eligible lending institution.
If you are a Perkins loan borrower:
To rehabilitate a Perkins Loan, you must make twelve (12) on-time, monthly payments of an agreed amount to the Department. Payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward your twelve (12) payments. Once you have made the required payments, your loan(s) will continue to be serviced by the Department until the balance owed is paid in full.
Private Loans - Student Financial Aid
When dealing with a private student loan consolidation company such a loan will have the ability to consolidate all educational based debt and aids the payment of education-related expenses along with the clearance of any high rate credit cards.
It not only eases the monthly repayment burden, but also the interest charged for the loan.
Now is the Time to Consolidate Your Student Loans
By Marjorie Salada
Time is of the essence when it comes to college student loan consolidation. Effective July 1, 2006 the federal student loan program will experience a 1.84% interest rate increase, making it one of the largest increases in the program's history.
With the announcement of the student loan interest rate increase being less than 30 days old, students are hurrying to get the best school loan consolidation deals available. There are several companies who are in the business of consolidating student loans for recent college graduates.
Due to the student loan interest rate increase being so significant, the Department of Education is allowing student loans to be consolidated while the student is still in school. Current students will find the in-school interest rate as low as 2.5%, but is more likely to be around 4.5%. After July 1, the in-school interest rate could exceed 7%.
Although the student will be giving up their six month grace period, they will not be responsible for making payments on the consolidated school loan until after they graduate. Even though there will be no six month grace period, the student still benefits by saving hundreds and maybe even thousands of dollars in interest payments on their consolidated student loans.
Likewise, if you will be taking out a student loan you will also see an increase in student loan interest rates. After July 1, 2006 Stafford loans will increase to 6.8% and PLUS loans will go to 8.5%. The interest rates on both of these types of student loans are fixed interest rates.
These are some of the benefits of consolidating your student loans:
Potential savings of hundreds of dollars in interest payments over the loan period by locking in a low, fixed interest rate
The convenience of making one monthly payment to one lender
Lower payments due to the loans being consolidated and the repayment period being extended
Most lenders will lower your interest rate after 36 months of on-time payments
No prepayment penalties
Interest paid on student loans, in most cases, is tax deductible
Overall benefit to your credit rating, due to have one loan with one lender, instead of several loans.
Even if you are not able to make the July, 1 2006 deadline, it is still to your benefit to consolidate your student loans. You will get a fixed interest rate and one payment. For me, the convenience of having only one monthly payment made college student loan consolidation worth it.
Marjorie Salada is the owner of school loan consolidation, a website that contains information and resources for consolidating your student loans.
Is Student Loan Consolidation Good?
By Ron King
Consolidating your student loan(s) is one of the smartest things that you can do. You should consider a student consolidation loan if you have several federal student loans or even just one large one.
Student consolidation loans will have fixed interest rates which are similar to those of the loans that are being consolidated. The amount that you can save through consolidation can be up to 58%.
Federal Stafford loans, Federal Direct Loans, Federal Perkins Loans as well as many others can be consolidated. Most of the time, they already have low rates.
Advantages
- You will have a single loan payment which is often lower than what you currently pay.
- It is easy to set up.
- It will help lower your debt burden.
- You can secure the lowest interest rate at the time.
- It can help you qualify for new or renewed deferments.
What To Consider
When you consolidate, make sure that the interest rate that you are offered is lower than your current rate. You want to pay off your student debt easier and maybe quicker too.
While consolidation can simplify the loan repayment process and lower your monthly payment, in the long run it usually increases the total amount that you will have to pay.
Student loan consolidation provides lower monthly payments by allowing you to spread the loan over 30 years in some cases. You are paying more payments, so be sure to compare the total cost of repaying your unconsolidated loans with the cost of repaying them through the consolidation loan.
The process of consolidating is very flexible. Consolidation is available from before you graduate down through years of repayment.
First, you need to gather information about your current loan. You need to know the balances and the interest rates, the names and addresses of companies and the names and addresses of personal references. The National Student Loan Data System can help provide you with the information that you need since it holds the most complete and accurate information for federal loans.
Paying Them Back
You will have 2 options to pay these loans back.
1. Pay a standard amount each month. This will include principle and interest. This is the lowest cost of interest paid way to go.
2. Or a graduated repayment. Here you start with lower payments that are only interest, but then they will keep increasing.
Usually repayment of your consolidation loans will begin in 60 days and will take from 10 to 30 years to fully pay back.
There are some questions that you should ask the lender before going forward.
- is there a rate reduction, for example for making your payments online or on time?
- does the loan meet your specific needs?
- is that the best interest rate available?
To get a student loan consolidation, you can still be enrolled in school or graduated. Either way, you'll find many lending options that will fit your needs.
Visit Consolidate loan for more. Ron King is a researcher, writer, and web developer, visit Articles for authors. Copyright 2006 Ron King.
Other Loan Consolidation Article Snippets:
So Consolidation Seems Like The Way To Go
"In order to get the best out of this offer, you will need to gather all the relevant information about your loans."
Borrowers Currently Enrolled In School Can No Longer Consolidate Their Loans
"It is recommended by many financial providers that you start the consolidation process with a federal consolidation loan to help improve your overall credit rating and then apply for a private consolidation."
What Is A Student Loan Debt Consolidation
"One of the great marvels about the American education system is that a student can ask for a low interest loan for the career he is studying for."
Student Consolidation Loan Information Sources - Where To Find Them
"Each of these aspects is a deciding factor that can help zero in on the best available education consolidation loan program."