Consolidating financial aid loans
Pay attention to what's happening with interest rates!
Pros: If you are in default on a federal education loan, you may receive a consolidation loan from the Direct Program if certain conditions are met.There are programs specifically for Alternative Loan consolidation.Your best bet is to research banks and lending institutions thoroughly before making any decisions.The benefits of consolidation differ for each borrower.In order to offset increased interest expenses, you can make larger payments, applying the extra as an over payment on principal.In the United States, the Federal Direct Student Loan Program (FDLP) includes consolidation loans that allow students to consolidate Stafford Loans, PLUS Loans, and Federal Perkins Loans into one single debt.
This results in reduced monthly repayments and a longer term for the loan.
Your signature on the consolidation application and promissory note obligates you to the terms of the new loan.
You do not have to consolidate all of your loans, but any loans you list on the application will be consolidated.
Don't be fooled if someone tries to suggest that this will save you money by getting you a lower interest rate.
The interest rate may be lower than the highest of your interest rates, but it is also higher than the lowest of your interest rates.
Recently there have been advertisements and infomercials on the radio and television regarding defaulted student loan debt relief .