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How To Consolidate Your Loan With Stafford Loan Consolidation
By Amelie Mag
While education may seem like something we should all be having free access to, the reality of education is different than this impression. In countries belonging to the Anglo-Saxon world whose economy has been traditionally organized according to liberal principles, the public sphere is very much reduced at the expense of private affairs. Very few things are for free and education is one of them. In the United States, a year of higher education at a prestigious private university may cost as much as $40,000 if not more. The quality of the educational services is excellent, but how many people can afford it? In many cases, the parents set up saving funds for the education of their children. They deposit regularly until the children reach the age when they have to go to college. For the students whose parents cannot provide for them and who are not among the few to receive full scholarships, the most common option is the student loan. Most American students are part of a government guaranteed loan program. Over the course of their college years, students end up being a part in more than one government guaranteed loan program and then they are faced with the question of whether to consolidate the loans or not.

The most talked about scheme of student loans is Stafford, together with the associated Stafford loan consolidation. The issue of Stafford loan consolidation appears when the students contract several different college loans from the federal government. The federal government either provides the college loan through its agencies, or it guarantees the student loans contracted from private bodies. Such a government guaranteed loan program may be either subsidized, which means that the government pays the interest rates for as long as the students are in college, or unsubsidized, meaning that the students have to deal with the interests themselves. Student may have both subsidized and unsubsidized loans and, in this case, it is advisable that they enter a scheme of government loan consolidation. Through government loan consolidation, they will get a unique interest rate instead of having to focus on which rates they need to pay interest on.

As these government loan consolidation strategies are all provided by the federal government, the terms “government loan consolidation”, “Stafford loan consolidation” and “federal loan consolidation” can be used interchangeably. A Stafford loan consolidation scheme is best to be contracted in the first six months after college graduation, when certain facilities are provided under the federal loan consolidation schemes. This period is considered to be financially difficult for recent graduates. Through federal loan consolidation, students will obtain lowed and fixed interest rates. Federal loan consolidation plans may also offer other specific benefits depending on the company that provides services for them. Students are generally advised to consider Stafford loan consolidation during the college years or immediately after graduation. A federal loan consolidation scheme may prove so beneficial for the students that universities have even set up offices offering specialized advice on how to read and deal with Stafford loan consolidation. An additional important factor is that interest rates for college loans are currently at an all time low in the US. Thus, it is in the best interest of the young people to undertake federal loan consolidation and freeze their interest


rates at this level.

However, there are conditions under which it is not advisable to undertake a Stafford loan consolidation program. For a student continuing education to get a second degree, being a part of a Stafford loan consolidation plan may exclude him for benefits that could be offered by new lending agencies. A federal loan consolidation program does not allow the installments to be paid sooner. Therefore, whether you have the means to pay back sooner or not, you will be committed to keeping the loan for the set amount of time. (Usually, a federal loan consolidation program will be set up for at least ten years). Moreover, Stafford loan consolidation means that you deal only with the federal government and that you may be excluded from some of the benefits achieved through dealing with several lending organizations. The argument goes that Stafford loan consolidation schemes simply give you less flexibility. On the other hand, these federal loan consolidation strategies are appreciated for the safety they provide.

If you are a student in the United States and have contracted more than one student loan, this is definitely the time to consider Stafford loan consolidation. The decision is not easy to make and that is why many colleges have set up counseling centers for this issue specifically. Beyond general advice however, each case should be judged individually, and the trade off is always between security and freedom.

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This page was updated on Nov 2009 and is Copyright © 2003 by Global Com Consulting Inc.