Consolidating Stafford Student Loans

After the student loan scandal of 2007, many alumni may be looking forward to consolidating their student loans this July. July is when the variable rates change on federal student loans. Alumni may be hoping to lock in low rates, combine multiple loans and lower their monthly payment. But before you jump on the consolidation bandwagon, there are a few things to consider.

The student loan scandal made many people afraid of the student loan lenders. But, now that guidelines are in place, it is a much safer time to consider student loan consolidation. Now when you start researching which lenders to consolidate with, you are more likely to get unbiased information. Keep in mind that you still need to make the final decisions on your own. Educate yourself before you pursue consolidation.

When you consolidate your student loans, you should consider what you want to accomplish. You may want to lower your monthly payments, lower your interest rate, lower the amount of time that it will take to pay off your student loan debt, or simplify your monthly bill paying schedule.

If your goal is to lower your monthly payments, you should consider repayment terms in your decision. Consolidating your loans generally does lower your payments, but it also tempts people into extend their loan terms. This can cause you to pay more interest in the long-run, so calculate how much more you’ll actually pay before you decide that this is the best option. Sometimes lowering your monthly payment by a little bit isn’t worth the extra time and money that it would take to pay it off. It just depends on what is right for you. See what many different lenders have to offer so that you can make an informed decision.

There are other reasons besides lowering your payment to consolidate student loans. Let’s say that you want to get a better interest rate. Keep in mind that you can’t consolidate over and over, so you’ll want to be sure that consolidation is the right move for you before you do it. If you have variable Stafford loans, then you need to wait and see if the rate actually goes down much. If it doesn’t really move, then it’s not worth wasting your consolidation option on. If you have a fixed rate Stafford loan, then you are at a fixed rate of 6.8 percent anyway and consolidating won’t lower it.

Sometimes consolidating is worth it just to get your bills together in one easy payment. This can help you pay your bills on time more consistently. Just be sure that you’re making the right move before you decide to consolidate your Stafford student loans.

About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation. For more information, please visit http://www.student-loans.net.

The Student Loan Scandal in a Nutshell

Many student alumni associations have been held up to the flame. Accusations and findings of guilt affecting student alumni associations have been all over the news in the last year. Some student loan lenders have been caught paying off university student alumni associations’ key players in order to get information about graduates. They have used the information and data about students and student alumni to market certain financial products directly to them. Student alumni associations have been steering students and alumni towards these lenders for years. In a scheme like this, both student loan lenders and student alumni associations stand to benefit. The problem is, students and alumni are the ones that get caught up in the trouble that it causes. They end up with student loans and financial products that ultimately punish them with high interest rates and terms that are over the top.

The confusion comes in when you consider that many student alumni associations are separate entities from the university, although many of the people working at the student alumni associations are university employees. Universities are required by law to be transparent in their dealings with students. This basically means that they can’t push you, as a student, in a direction that may not be best for you. The story deepens when you consider that most of the people affected by the misdealings of the student alumni associations are alumni. They are no longer students, so they get caught in a loop-hole that the student alumni association could get away with.

Since then, student alumni associations have been pressed to make sure that any contracts that they hold with lenders are ethical. The New York legislature passed a bill that keeps universities from conducting student loan business that results in payments or perks from a lender. The following investigations led down a long trail of conflicts of interest. The New York legislature bill was just the start of the repercussions that were about to rain down on student alumni associations and student loan lenders.

President Bush signed the bill that overhauled student aid policies. The bill was meant to restore a balance in the student loan system by benefiting students, not lenders and banks. Although many lenders and financial institutions saw parts of the bill as unfair, the decision stood and we were on our way to a better student loan system.

When you are getting ready to apply for financial aid and student loans, make sure that you do your own research. There are companies out there that offer products from many lenders, expanding your resources for student loans. You can also take comfort in the fact that there are now laws in place limiting the amount of corruption in the student loan system. Universities found to be involved in any sort of kickback scheme will be punished by having less access to federal loan programs, along with other ramifications. Many of the investigations and enforcements of policies have not happened yet, but soon they will. Universities and lenders will be held will be held accountable for dealings that resulted in students and alumni not having their choice of lender as a result of the kickback scheme.

About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation. For more information, please visit http://www.student-loans.net.