The Advantages Of Federal Loan Consolidation
By Amelie Mag
What you need to know about Stafford loans is that they are loans meant to give students the opportunity to go to college. The thing that makes Stafford loans different from other student loans is that they are part of a government guaranteed loan program. They are federal loans. This makes them a little bit better than other loans because you have several advantages and the support of the government. The persons who apply for such an option can benefit from Stafford loan consolidation programs. The purpose of Stafford loan consolidation is to provide financial help to students in need and, being a federal loan, the laws of federal loan consolidation apply here as well making everything even easier.
There are two kinds of Stafford loan: subsidized and unsubsidized. The difference between them may mean a lot of money. Basically a subsidized loan is part of a government guaranteed loan program. This means that you wonít pay any interest while you are still in school. The government makes sure that all the interest your loan gathers while you attend school is paid and you donít have to worry about it. After you finish college you still have a period of grace which is about six months usually. During this grace period you donít have to pay any interest, just like you were still in school. You can get a subsidized loan depending on the specific financial aid you have. The unsubsidized loan is different. You donít get it based on your financial aid and itís not part of a government guaranteed loan program. Itís not such a great thing because the government doesnít support the interest rate while you are still in school. Youíll have to pay interest from the moment you get the loan, even if you still attend classes. However, if you can handle a job and college at the same time, by paying the debt you have, when you finish school, you will have the chance to be a ďfreeĒ person earlier.
The problem with Stafford loans is that, if you get the loan, it probably wonít be all subsidized. Taking a closer look you will see that part of the loan is subsidized and the other part is unsubsidized. So, for a part of the loan you will pay interest while you are in school and for the other part you wonít. In conclusion, it will be like you have 2 different loans. This is where Stafford loan consolidation comes into play. Through a Stafford loan consolidation program you will take the two types of loan and combine them into one. This will make your life easier and the payment method a lot quicker saving the student a lot of time. Instead of having to worry about paying the monthly interest for the unsubsidized part of the loan and after graduation having to worry about paying off the whole loan, you will just have to make one monthly payment. This is what a Stafford loan consolidation program can do for you.
Stafford loans are federal loans so, the Stafford loan consolidation programs are very similar to federal loan consolidation programs. Usually all loan consolidation programs, whether they are Stafford loan consolidation programs, federal loan consolidation programs, government loan consolidation programs or just plain student consolidation programs, they are good. Through them you can save a lot of time and money. All these consolidation programs might be exactly what you expect from them, but it depends very much on how you look at the problem. Letís take a federal loan consolidation program for example. The money you will save
wonít be an extraordinary amount. Through a federal loan consolidation program you get another loan to pay off your existing ones. The thing is that this type of loan is extended over a long period of time so, the monthly payments will be low, but in the end you wonít save that much money.
Federal loan consolidation, this includes Stafford loan consolidation, exists to help students manage their loans better. The loan you get through the federal loan consolidation program has some advantages. First off all it spreads over a long period (resembling a mortgage, but over a shorter period of time). This has its advantages and disadvantages. The disadvantage consists in the fact that a Stafford loan consolidation program might spread over ten years, letís say. The good thing is that the monthly payment is low and itís not variable (it wonít drop or rise in time) and you have to make the same payment every month. Other programs start of with a small payment which increases.
Government loan consolidation programs, as well as Stafford loan consolidation programs, have a certain period when a student should apply for one. The best time is usually just before the six month grace period ends. Before you start this kind of program you should consider all the benefits it involves very well, but not overlook the downside either. You shouldnít rush in a government loan consolidation program just because you have a couple of loans and because your grace period is ending. You can start the program even after you begin making the payments for the student loans you already have. If you are careful enough and patiently research all options, you will surely find the best solution for your financial problems.