School Consolidation (Seeing Things Clearly)
People tend to fear what they do not understand. A typical byproduct lf this fear is speculation and rumor about the misunderstood subject. School consolidation is one of those little understood topics that would benefit from considerably more clarity.
When you are considering school consolidation of your federal loans, it is very important that you try to see things as clearly as possible. You need to be aware of the truths regarding consolidation programs and see through the myths, fallacies and lies that sometimes shroud this means of handling your student loans.
Myth: Federal loan school consolidation has a deadline.
Truth: There are no deadlines in federal consolidation. BUT, you should know:
- Consolidating during grace periods, while enrolled or in deferment can net the lowest interest rates
- Some federal loans have an annual rate change (July 1st) which can affect the school consolidation rate you receive.
Myth: There is a fee for federal student loan consolidation.
Truth: There are no fees for federal consolidation of student loans. You can benefit from a little shopping around on your school consolidation because some lenders offer great benefits and interest reductions for direct debit and on time payments.
Myth: School consolidation loans save you a lot of money.
Truth: While it is true that you can repay your loans over an extended period of time, you also have to pay interest on that time which actually increases the amount you pay out on the loan. You can save money by choosing the right lender and program because the difference in rates and incentives can be in the thousands of dollars.
Myth: School consolidation loans result in the forfeiture of your grace period.
Truth: If you consolidate while enrolled you will lose your grace period only. You can consolidate during your grace or repayment period, or while in deferment. Once you consolidate you will have to begin repayment immediately. If you are looking at consolidating and you are close to graduation, you can work with the loan provider to set a date to begin repayment at the end of the grace period.
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