Category: Student Loan Consolidation

Accelerate your payments as your income grows

The main and primary financial benefit of loan consolidation is simplified your payments. Rather than five, ten, or more payments every month, you have only one or two payments to make. Your options depend on many factors, including: whether your loans are federal or private (and you may have both), how much you earn, what assets you have, and whether you’re being contacted for collections.

In many cases, debt consolidation stretches the term of the loan, so you may actually pay more in interest over the life of the loan. If possible, try to accelerate your payments as your income grows to avoid paying additional interest. However, any discounts you receive for consolidating student loans will reduce the total interest you pay over the life of the loan.

Finally, student loan consolidation makes it easier to keep track of total annual interest paid. That figure is important if you are eligible for the student loan interest tax deduction. Although the deduction will not save you a lot of money, every little bit helps. It is hard to give any specific, helpful advice, without knowing more details about situation. A first step is trying to speak to creditors or debt loan consolidation lenders, in order to work out some kind of payment plan.

Too many borrowers remain unaided

The greatest challenge we face at this moment, however, has less to do with the price of new student loans than it does the $1.1 trillion that has already been drawn down. And while the government has made a decent effort to address this problem, too many borrowers remain unaided because their loans have been deemed ineligible for one reason or another.

The government should expand its relief programs to include all student loans – without regard for origination source (government versus private), payment status (current versus past due) or any previous action (consolidation, forbearance) – so that they can be restructured in a way that makes it possible for all borrowers to repay all their debts in full.

This compendium of measures – revising the tax and bankruptcy codes, holding schools financially responsible for their outcomes, fairly pricing and structuring student loans, setting sensible loan limits and, most important, forthrightly addressing the existing debt – make sense for the benefit of the borrowers, their benefactors (the taxpayers) and the economy as a whole.

Reasonable approach to student loans

Barack Obama signed into law a measure restoring lower interest rates for student loans, pledging the hard-fought compromise would be just the first step in a broader. “Feels good signing bills. I haven’t done this in a while,” Obama said, alluding to the difficulty he’s faced getting Congress, particularly the Republican-controlled House, to approve his legislative priorities, such as gun control and budget deals.

The rare compromise emerged only after a frenzy of summer negotiations, with lawmakers at odds over how loan rates should be set in the future even while they agreed that a doubling of rates — it kicked in July 1 when Congress failed to act before the deadline — would be bad policy and bad news for students.

Encircled by lawmakers from both parties in the Oval Office, Obama praised Democrats and Republicans alike for agreeing — finally — on what he called a sensible, reasonable approach to student loans even as he cautioned that “our job is not done.” Obama cast the student loan deal as just the first of many measures the U.S. needs to make college affordable as a higher-tech economy makes advanced training and education a necessity for many workers.

Plan would cap rates on loans to undergrads

Under the compromise measure, undergraduate students would pay a rate of 3.85% next year on subsidized and unsubsidized Stafford loans. The plan would cap rates on loans to undergrads at 8.25%, for graduate students at 9.5% and parents at 10.5%.

While this is not the agreement that any of us would have written, and many of us would like to have seen something quite different, I believe we have come a very long way on reaching common ground – Sen. Dick Durbin of Illinois, the Democratic whip in the Senate, said at a press conference Thursday.

Senator Tom Harkin, the Democratic chairman of the committee that oversees federal education programs, also was present in announcing the deal. The Iowa senator had resisted for weeks agreeing to a plan unless it included caps on how high the interest rates on the loans could rise. The agreement, if approved by the full Senate, would tie interest rates on a variety of government-backed loans to 10-year Treasury notes and would lock in surcharges paid to the government for administrative costs.

Borrowing students likely to default on their loans

The Keeping Student Loans Affordable Act, sponsored by Miller, is one of several proposals in Congress to delay or lessen the scheduled increase on student loan interest rates. A similar rate hike was scheduled to occur last summer but was delayed for one year after the issue became a talking point in the presidential campaigns of both President Barack Obama and GOP challenger Mitt Romney.

Miller’s announcement comes on the same day of a USA Today report that borrowing students at 265 U.S. colleges and universities are more likely to default on their loans than full-time freshmen are to complete their studies.

Many students at these colleges will no doubt take out loans, graduate and get good jobs. But the high default rates and lower graduation rates suggest that many will not. Among the “Red Flag” schools are two in Utah, the private for-profit Broadview University and the ITT Technical Institute of Murray. According to the report, Broadview borrowers default their loans at a rate of 19.3 percent, compared with a 19 percent graduation rate at the school.