| Consolidating student loans is a great opportunity to | | | | federal benefits that are part of your federal loans. For |
| lower your monthly payments and free up some cash | | | | instance, the cap on interest charged is at 8.25% now |
| each month. Here are some smart tips we have for | | | | for federal student loans, and you would lose this cap |
| you on the process of consolidating student loans:oIf | | | | if you consolidated both federal and private loans into |
| you are in your grace period, it is the best time to | | | | the same loan. Deferment and forbearance are |
| consolidate your student loans. You are in the grace | | | | options that you can use with federal student loans if |
| period if you have finished school but you are not yet | | | | you fall upon bad economic times like losing your job to |
| in the repayment period, which usually begins 6 months | | | | layoff or termination, becoming disabled and unable to |
| after your graduation. If you consolidate your student | | | | work, etc. These are important benefits that you would |
| loans during your grace period you can usually qualify | | | | be wise not to lose. Deferment is when the |
| for a lower interest rate from the lender.oThe federal | | | | government allows you to postpone payment of the |
| government passed a recent law that lets borrowers | | | | principal on the loan for a period of time. Depending on |
| consolidate their student loans with any eligible FFELP | | | | the type of loan you have, you may or may not need |
| (Federal Family Education Loan Program) lender. This | | | | to repay the interest during deferment. Forbearance is |
| means that you have more lenders to choose from | | | | when the government allows you to stop your |
| than you did in the past.oThe federal government has | | | | payments for a period of time, but you still need to pay |
| set the interest rate on consolidation of federal school | | | | the interest payments. In both deferment and |
| loans, and this is part of federal law, so lenders are | | | | forbearance, there may be ways for you to add the |
| legally bound and cannot charge you a higher interest | | | | interest payments onto the back of your loan so that |
| rate for any reason. It's always best for you to get the | | | | you pay nothing during the period of deferment or |
| lowest interest rate you can from the lender that you | | | | forbearance.oThe Higher Education Act was passed |
| choose, but interest rates on consolidating student | | | | for the protection of students taking out loans for |
| loans that were backed by the federal government | | | | educational expenses. It specifically mandates that |
| are fixed for the life of the loan and can't be higher | | | | federal student loan consolidations have to have fixed |
| than 8.25%. That doesn't mean that a lender can't | | | | interest rates, no processing fees or loan fees of any |
| charge you less interest, so it still pays to shop around | | | | kind, no credit checks for the borrower, no |
| for the best rate.oIf you have both federal and private | | | | prepayment penalties if the borrower pays off the |
| student loans, don't let your lender put them together | | | | loan early, and a lower interest rate if the loan is |
| into one consolidated loan. If you do, you will lose the | | | | consolidated during the grace period. |