Student Loan: Consolidation Loan Information
There are plenty of websites and advertisements about student loan consolidation companies. They give you everything you need to know about how their loan can save you money and who you can call to start an application. When you want to do a little research on loan consolidation, it can be kind of tough to get student loan consolidation information. If you do not want to be taken for a ride in getting a consolidation loan you should have as much information about the loan process before you even look at the student loan consolidation application.
Players of Student Loans
There are two types of loans, private and federal. With private loans you are dealing directly with the lender which can make things easier over the course of your loan. With federal loans (Federal Family Education loan program and Federal Direct loan program) you have to deal with government entities and regulations which can put you through a tangled web of confusion when it comes to communicating through problems or changes. The most important part of student loan consolidation information is knowing the players.
Department of Education – the Department of Education oversees all federal aid programs which include grants, scholarships, fellowships and loans of all forms. They also serve as the lender for the Federal Direct loan program.
Lender – this is the company that provides the loan. You can get a list of lenders from your university financial aid office when you want to consolidate. They will give you a list of their preferred lenders. You do not have to go with a consolidator on this list, it is simply a reference point.
Guarantor – the ‘insurance agent’ for the lender. They guarantee that the loan will be repaid even if the borrower defaults.
Servicer – a company contracted to handle loan services such as the application, billing and collections issues.
Options for Student Loans
Once you have gotten all the student loan consolidation information you need, you will be ready to take out the loan. Taking out a loan requires repayment so you will need to know what your options are for repayment. Most companies offer four types of repayment plans depending on your preference. You can usually change them annually if you need or want to do so.
Standard – the installment is the same throughout the loan; well defined term
Extended – the installment is the same throughout the loan; term up to 30 years
Graduated – the installment gradually increases over the term with assumed income increases
Income-contingent – the installment changes annually according to the amount of income, increasing when you have more money and decreasing when you have less.
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