Virtually all federal student loans are eligible for
consolidation! Even if your loan is in default you may still qualify
for student loan consolidation. Also, lenders may not refuse to
consolidate your loans because of the number or type of loans you want to
consolidate, the type of school you attended, or the low interest rate mandated
by the government and repayment schedules.
Note: The only exception to eligibility
is if a judgment or wage garnishment is already in place.
WARNING: The statute of limitations on defaulted
student loans was eliminated by the Higher Education Act. Section 484A
removes all limitations and gives the Department of Education or the guaranty
agency (bank or lender) the ability to file suit, enforce judgments, initiate
offsets, or other actions, to collect a defaulted student loan regardless of
the age of the debt. Statutes of limitation are no longer valid
defenses against repayment of a student loan.
No Fees: You will not be charged any
application fees or prepayment penalties when consolidating student loans!
No Credit Checks: Consolidating student loans
is a FREE government program that does not require credit checks. (Exception:
PLUS borrowers are subject to a check for adverse credit history.
Payback Period The payback term ranges from 10
to 30 years, depending on the amount of education debt being repaid and the
repayment option you select. Your other education loans not included in the
consolidation loan are considered in determining the maximum payback period.
Interest Rates: Federal statute sets the
interest rate on consolidated student loans at NO HIGHER THAN 1/8th of a
percent more than the effective rate on your individual loans fixed for the
life of the loan thus, you are protected from future increases in variable rate
loans!
Repayment Options:
There are three basic repayment options for consolidation
loans:
- Level-repayment (this means equal installment payments over
time);
- Graduated repayment (payment amount increases over time;
and
- Income-based payment plans (payment amount increase or
decrease is based on income.
Repayment Incentives
Repayment incentives come in the form of lower interest rates
and/or rebates and are based on your on-time repayment history and payment
amount. Higher payments mean sooner payoff which equals better
incentives.
Tax Credits*
Two federal income tax credits—dollar-for-dollar
reductions in tax liability—are available for higher education expenses.
The Hope tax credit, worth up to $1,500 per student, is
available to first and second year students enrolled at least half time.
The Lifetime Learning tax credit is equal to 20 percent of a
family’s tuition expenses, up to $5,000, for virtually any post-secondary
education and training, including subsequent undergraduate years, graduate and
professional schools, and even less than half time study.
Also, interest on student loans might be tax deductible!
Always check with your tax consultant to be sure you
qualify for these tax credits!
