2010

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Understanding Student Debt Consolidation     

 

The use of financial aid to support higher education is on the rise. Between the old decades of the nineties up to the year 2000, student loan volume has increased to about $37.4 billion. That’s a hefty amount of money supporting literally thousands of students struggling to finish their studies.

 

Student Debt Consolidation on the Rise

 

 

Student debt consolidation is also on the rise, considering that more than 64% of the whole student population of the United State cannot repay the debts immediately after graduation. Employment immediately after graduation is not completely rewarding, as companies look for seasoned employees for higher salary bands.

 

Financial aids come from two main financial highways: federal student loan consolidation and private student loan consolidation. Loan programs like the Parents Plus program, the Perkins loan and the Stafford loan are one type of financial aid for students with ailing wallets. Small financial lending companies, universities and banks are mostly privately owned and offer loans at higher interest rates.

 

Stafford loans on the other hand can either be federally subsidized or unsubsidized. Subsidized loans have interest rates covered by the government until the borrower graduates and is employed. Stafford loans comprise about 59% of all approved federal student loans in the country.

 

Financial grants from institutions like the Rockefeller Foundation comprise 41% of all financial aid made available to American students and migrant student populations. A decade ago, the picture was the opposite. But because of the inflation and the recession, the educational economies are suffering as well.

 

The Correct Process of Getting Aid

 

If you plan to acquire a federal loan and you plan to get a student debt consolidation after graduation, you have to know the right process of getting a federal loan consolidation.

 

1. The first step is creating a financial plan based on research. Aside from matriculation, make estimates on how much you will need for student accommodations, food, clothing, the occasional haircut, etc.

 

2. Fill up a FAFSA or a Free Application for Federal Aid. Don’t listen to people who tell you that you might not be eligible at all for aid because no one really knows that until you apply for one and you get awarded particular loans.

 

The importance of getting a FAFSA cannot be underemphasized. According to Sandra R. Dunn, chief marketing and sales officer for Chela Financial, a San Francisco-based education financer:

 

"It's an important first step. Even if you or your parents don't believe you're eligible for federal financial aid."

 

Ready for Student Debt Consolidation?

 

According to Katarrah Basinight, a Texan financial aid counselor with Sallie Mae:

 

“Depending on your year in school, loan amounts range from just under $3,000 to more than $5,500”

 

This is why you should never borrow more than you truly need. After graduation, student debt consolidation is available to lower the interest rates.

 

Federal student loan interest rates are dropping and the time is ripe for financial consolidation. Combining all of your existing debts under one affordable and comfortable monthly payment can be a welcome easing of financial worries.

 

If you think you’re up for the whole process of consolidation and repayment, and you want to borrow money now, you can get more information about federal loan application at www.fafsa.ed.gov or you can ring up the Federal Student Aid Information Center at 800/433-3243.

 

 

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