|
| Federal Student Loan Consolidation |
Interest rate
• The consolidation interest rate consists of the weighted average of the rates of the loans you are going to consolidate, as certified by your loan holder, rounded up to the nearest eighth of a percent. Consolidation interest rates depend on the loans' primary interest rates. Borrower benefit interest rate reductions are not included.
• The maximum interest rate is 8.25%.Fees
Fees are not required.
Repayment
• Level payment: This option has the lowest total interest cost. You pay principal and interest each month throughout a 10-30 year repayment term based upon your initial loan balance.
• Graduated repayment/Grad Choice Account: You can make reduced payments as low as interest only for up to five years. Then you make standard payments of principal and interest for the remaining payment term.
• Income-sensitive repayment: Income-sensitive repayment need a higher total loan cost than standard repayment. Payments depend on your income because they are a percentage of your gross income. Every year you must reapply for this plan and payments are fixed annually to reflect changes in income.
• Extended repayment: If you borrowed more than $30,000, you may be eligible for a 25-year repayment term and can choose standard or graduated option to keep payments affordable. Your total loan cost with extended repayment may be higher than with standard repayment.
Legal
• Repayment begins instantly after disbursement of the loan.
• Automatic debit will occur each month even if advance payments are made as long as you are in repayment.
• If you consolidate student loans you will lose advantages that applied to the original loans, such as grace, postponement, and forbearance. Nevertheless, consolidation loans propose postponement and forbearance advantages as well.
|
|
