A Consolidation Educational Loan lets one to combine each and every federal educational loan that one takes to finance his/her college education into one single loan.
To apply for a loan consolidation the borrower should make an application to the lenders. Each of them will require to be furnished with information about the borrower's outstanding amounts from other lenders. After analyzing the amounts the repayment criteria are determined.
Almost all federal education loans are eligible to be consolidated, including unsubsidized and subsidized Direct and FFEL Stafford Loans, Federal Perkins Loans, SLS, Health Education Assistance Loans and Federal Nursing Loans.
Private education loans do not have the eligibility for consolidation.
All Direct Stafford Loan and FFEL borrowers have eligibility to consolidate after graduating, leaving school, or dropping below half-time enrollment.For PLUS loans only after being fully disbursed they become eligible for consolidation.
Delinquent and faulty borrowers are required to maintain certain requirements to consolidate their loans as per set by their lenders.
The rate of interest for Direct Consolidation Loans and FFEL is set in accordance with an established formula of federal statute.
The fixed rate is dependent on the weighted average of the rates of interest on the loans at the time of consolidation, and rounded up to the closest one-eighth of a percent.
The interest rate usually does not rise beyond 8.25 percent. The rate of consolidation is fixed during the lifetime of the loan, which prevents future growth in variable rate loans but bars from benefiting from future drops in variable rates.
Consolidation Loans repayment starts by 2 months of loan disbursement. The range of the payback term is between 10 to 30 years, which is dependent on the education debt amount being repaid and the repayment option that is selected.
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