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There are primarily two types of federal student loan programs in the United States. These include the Federal Family Education Loan Program or FFELP and the Federal Direct Student Loan Program (FDLP). Under these categories, there are different types of student loans that include Federal Stafford Loans, Perkins Loans, and Direct Stafford Loans, Parent PLUS HEAL loans, Health Professional Student Loans, NSL, FFELP, guaranteed student loans and direct loans. Each student can apply for more than one type of loan in order to meet his educational expenses including paying tuition fees and other related expenses. All federal loan types are eligible for student loan consolidation.
Important fact is that consolidating federal student loans is more advantageous than private student loans. Federal consolidation loans are managed by the Department of Education. Federal consolidation loans are fixed-rate loans that are offered at low interest rates resulting in reduced monthly repayments. In most cases, a federal student consolidation loan has longer and flexible repayment terms.
One can obtain a student loan consolidation at an effective rate by following a few strategies.
1. Every federal loans such as Perkins and Stafford loans offer a 6-month grace period for every student after completion of graduation. At the end of this grace period, loan repayment begins. This is the best period to get the student loans consolidated. Interest rates offered during the grace period are far lower than the rates offered after the expiration of grace period. Once the student gets employed, interest rates are primarily influenced by the income of the student.
2. One should never combine private loans like credit card debt and car loans with federal student loans while opting for federal consolidation loans. Private loans come at a higher interest rate and do not carry the same types of benefits as like a federal loan.
3. It is important to shop around for a better deal. Due to increased competition in the market, several financial organizations and private lending firms offer a variety of packages and promotional offers so as to attract customers.
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