How Student Loan Repayment Programs Can Help You Pay Off Your Student Loans

As the fall semester gets started, students may be struggling with tuition bills, program fees and other education-related expenses like books and lab materials. When parents need some help meeting their student’s educational expenses, a PLUS loan could provide the financing they need. It’s also a good time to consider student loan consolidations to lower monthly payments on existing, non-subsidized student loan repayment programs.

Federal student loan consolidation is available for Stafford, Plus, Perkins, Heal, NSL, HPSL and all of the Direct Loans. You can only consolidate the loans that are not in default, so you must first take care of the defaulted loan in order to put it into the consolidation.

There are really no disadvantages to consolidating student loans. The one disadvantage that we are aware of has to do with the Federal Perkins Loan. Perkins loans are typically subsidized by the Federal Government while in deferment while the student is still in-school. When you consolidate a Perkins loan it loses that subsidization.

The advantages of consolidating a loan are only one monthly payment, usually fixed rate which is advantageous if rates are low and loan terms up to 30 years depending on the balance. This can lead to lower monthly payments overall. If you have a Stafford loan, you should consider consolidating during your grace period as the loan repayment is .6% lower than it is in repayment.

The Stafford loan has these repayment options:

Standard repayment is where the principal and interest payments are due each month throughout the repayment period.

Graduated repayments are smaller at the beginning of repayment process and increase at specific periods and in specific amounts over the term of the loan.

Income-based repayment takes monthly loan payments based on a percentage of the borrower’s monthly gross income. offers an income-sensitive repayment plan.

Extended Repayment provides eligible Federal Stafford, Federal PLUS and Alternative loan/Federal Consolidation loan borrowers payment relief through a lengthened repayment term of up to 25 years.

Serialization is when the loan holder purchases your loans held by other institutions and services them in one account. You make one monthly payment but retain the original terms and interest rate.

With the student loan repayment programs, the consolidation program should be seriously considered. The borrower may refinance multiple loans and original loan amounts are paid in full and a new loan for the combined balance is originated, with a new loan term and usually a new interest rate.

Student Loan Consolidation can lower your rates by 60% whether your loans are federal loans, private loans, parent PLUS loans, or Stafford loans. It is important to take advantage of federal financial aid before turning to alternative financing options such as private loans. Refinancing your student loans will reduce your monthly payments and lock in a fixed interest rate. When you consolidate student loans you are refinancing your existing student loans and rolling them into one single manageable loan.

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