Students Should Consolidate Student Loans Before July 1 Following Repeal of Single-Lender Rule

FINAL Informal Article 06/21/06 576 words

Students Should Consolidate Student Loans Before July 1 Following Repeal of Single-Lender Rule

The single-lender rule was repealed June 15, 2006 when President Bush signed the emergency supplemental spending package, H.R. 4939, into law, following the Senate's approval. In a vote of 98-1, the Senate passed the bill earlier in the day after it passed the House June 13 with a vote of 351-67.

With the repeal of the single-lender rule, student loan borrowers now are able to consolidate their student loans with whichever lender they choose. No longer is there a stipulation that borrowers have to consolidate student loans with their original lender.

President Paves the Way for Students to Benefit

President Bush has awarded student borrowers the opportunity between now and July 1, when interest rates increase, to be able to consolidate and lock in at a much lower interest rate. In less than two weeks on July 1 federal student loans () will be impacted by the second-largest rate increase in the history of the program as rates will rise 1.84 percentage points.

The forthcoming increase on interest rates is due to the Deficit Reduction Act of 2005, S. 1932, which was passed Feb. 8 when the president signed the bill into law. The bill also included a total of $12.7 billion in cuts to the federal student loan program.

Stafford and PLUS Loan Increases

Interest rate increases will affect various students loans including Stafford and PLUS loans. Student borrowers should take note of the following increases set to take effect: A new fixed rate of 6.8 percent for Stafford loans disbursed on or after July 1, 2006; and a new fixed rate of 8.5 percent for PLUS loans disbursed on or after July 1, 2006.

Borrowers looking to consolidate their outstanding student loans now are in the best possible position, according to NextStudent, the Phoenix-based premier education funding company. With less than two weeks remaining until the July 1 deadline, there still is time for students to consolidate with the lender of their choice and at a low interest rate.

NextStudent's Low Rates

NextStudent features a 2.5 percent interest rate for qualified borrowers, with applied benefits. The following benefits are:

A .60 percent rate reduction for those student borrowers who consolidate after they graduate A .25 percent rate reduction for student borrowers who opt to use Auto Debit An added 1 percent rate reduction for those student borrowers who make 36 consecutive on-time payments

NextStudent is a well-established company with a reputation for catering to borrowers' needs. It specializes in consolidation of all forms and offers low rates along with its aggressive benefits and discounts in order to bring to borrowers the best possible advantages of student loan consolidation.

Through student loan consolidation () all of a student's loans are combined into one at one low interest rate, making it financially easier for borrowers. Payment terms can be extended and thousands saved over the long term.

The signing of the legislation that repealed the single-lender rule will help student borrowers throughout the country to consolidate their loans with the lender of their choice at a much lower interest rate. However, students are urged to consolidate before the interest rate increase on July 1, less than two weeks away. After that date, rates will increase and students will lose their chance.

NextStudent believes that getting an education is the best investment you can make, and it is dedicated to helping you pursue your education dreams by making college funding as easy as possible. Learn more about student loans at .

When Should You Consolidate Student Loans

If you have just graduated from college, the likelihood is that you are under a large amount of debt in the form of student loans. You might be wondering if there is any way to reduce the amount you have to pay. One solution for reducing your debt is to consolidate your student loans. Student loan consolidation is similar to refinancing a house on better terms: although the principal of the loan will not be affected, the interest rates you can lock in when you consolidate student loans to a fixed rate can be substantially better, reducing your monthly payments by up to forty percent. Plus, you might be able to stretch out your payment time to reduce your monthly payment amount even further.

The disadvantage when you consolidate student loans during your initial six-month grace period is that you must start making your payments right away. This can be difficult if you have not found a job after graduation, although you can wait until just before the grace period ends to consolidate, and still receive the lower rates. Furthermore, once you have consolidated your student loans, you cannot un-consolidate them again, so make sure to consider your choice carefully.

How is Interest Calculated When I Consolidate Student Loans?

When you consolidate student loans, your lending company pays off your government loan and issues you a new loan under its own name. The typical way to determine the interest rate on the new loan is to take the average interest rates on all of the student loans, and offer a new rate that is an eighth of a percentage point higher (up to a maximum interest rate of 8.25%). Although agreeing to a higher interest rate might not sound like a good reason to consolidate student loans, this rate is fixed over the life of the loan, whereas the government rates will fluctuate. Since rates are at an all time low right now, locking in the current rates might be a good idea. Furthermore, many banks give you ways to bring down the percentage rates. For example, some lending institutions will drop the rate by as much as a quarter point if you agree to automatic deductions from a checking or savings account, whereas others drop the rates after a certain number of timely payments. As an additional bonus, there is no penalty for paying off your consolidated loan early.

When Would You *Not* Want to Consolidate Student Loans?

Before you decide to consolidate student loans, you should carefully consider your alternatives. For example, did you realize that it might be possible to have your student loan cancelled altogether? Student loan forgiveness options include volunteering, for the Peace Corps for example, or working for the government in a low-income area as a teacher or doctor. Cancellation is not possible, however, after you have consolidated your student loans. If this kind of work interests you and is available, it could be a better option than loan consolidation.

Another time to hesitate before you choose to consolidate student loans is when you are close to finishing your payments. Stepping up the payments and saving yourself some interest and the hassle of consolidation might be more advantageous to you.

Finally, there are loans that you might want to keep open because they offer special advantages. For example, if you are considering going back to school and you have a Perkins loan, you would not want to consolidate that with your other student loans. The government will pay all interest on Perkins loans while you are in school, but if you have chosen to consolidate student loans, you will not be able to receive this benefit. You could always choose to leave any special kinds of loans out of the consolidation mix, however.

What You Should Know About International Student Loans

International student loans are actually customized personal education loans that are offered to foreign students who are studying in the USA or American students studying abroad. Some of these loans are available as private rather than government loans, and almost all of these loans require an American citizen as consignee.

These education loans are a lot like other student loans available and are particularly suitable for those students seeking a higher education in the fields of engineering, medicine, science, commerce, arts or otherwise. Student loans provides tremendous financial assistance to international students who look forward to achieving their dreams through higher education abroad.

The procedures for applying for these student loans are very specific and it is imperative that students follow the guidelines to avoid delay or disapproval of their application for admission to the USA to study.

These students loans are available for international students who intend to study in the USA, provided they plan to attend an approved school and have a US Citizen or a permanent resident who can co-sign the loan together with them.

Students MUST submit a duplicate of one of several important documents: Student visa (type F1, H1B, J1, or M1).

International students have to fill out an application using an approved co-signer and should submit an application for international student education loans after exhausting all scholarship grants, personal resources along with other options.

International Student education loans, just like most personal education loans, may be used for education-related costs, which includes such things as tuition, books, fees, insurance, transportation and room and board along with other school-related costs International students may simply pay an origination charge after receipt of the loan, however, this sum is in the overall loan amount, and does not need to be paid in advance.

Students will be immediately notified if they are conditionally approved for the loan. Students studying abroad can defer repayment of their international student loans while they are enrolled full-time, and for six months after they complete their studies. Students will then have up to 20 years to repay the loan, with a payment due each month. There are a number of different international student loan programs available so students should do the research to seek out the ones that offer them the best advantage.

It is very important to remember that these loans are sanctioned on a one year basis; therefore, if the student is planning to study for more than 1 year, they will have to contact their student financial aid office to reapply for the following year.

My personal experience can attest to the benefit of student loans. My goddaughter lives in Europe and desires to study in the United States; as part of my efforts to assist her in gathering as much information as possible to obtain a student loan, I saw this as a perfect opportunity to share what I have discovered with others who might be in a similar situation.

After much research, my god-daughter is well on her way to meeting her goal; she plans to begin her studies in the U.S. in 2011; we are excited and know that she will use this great American education to give back to her country of Cameroon, Africa.

Get more details about student loans and help a student get the process started today.