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A School Loan Consolidation Primer
By Jay Stockman, Thu Dec 8th
"Hey Dad!", my son screamed from our front door, "I did it, Iwas accepted to Boston University.". My momentary exhilarationwas overshadowed by the financial realities of college,especially private college. A quick calculation of my costs for4 years of tuition, and expenses came to roughly $250,000, avery intimidating figure. Overwhelmed I thought, how could Ipossibly afford to send him to college? Fortunately, there arevarious options available to finance this academic endeavor. Federal programs are the single, largest source of school loanconsolidation. The first step in applying for this type of aidis going on the Free Application for Federal Student Aid (FAFSA)website, at http://www.fafsa.ed.gov/, and fill out acomprehensive questionnaire. It generally takes around 7 days toprocess, at which point you will receive a Data Release Number,and Estimated Financial Contribution. It is important to findout if the school you will be attending participates in thefederal student aid programs, most do. There are several federal programs available for student aid,assuming school participation. The Federal Stafford Loans, areavailable
to both undergraduate and graduate students.First-year undergraduates are eligible for loans up to $2,625.Amounts increase for subsequent years of study, with higheramounts for graduate students. The interest rate is variable,but never exceeds 8.25 percent. The Federal PLUS Loans areunsubsidized loans made to parents; the interest rate isvariable, but never exceeds 9 percent. Federal Work Studyprovides jobs to undergraduate and graduate students, allowingthem to earn money to pay education expenses. These are themajor federal sources of loan money for college.
Private education loans are also available from a variety ofsources to provide supplemental funding when other financial aiddoes not cover costs. These loans are not sponsored bygovernment agencies, and are offered by banks or other financialinstitutions. Sallie Mae is a unique loan that consists of acomprehensive package of both private and federal loans. After accumulating 4 years of undergraduate education loans, itis best to consider a School Program. Verysimply, you can elect to combine all your outstanding loans intoone student consolidated loan, which may create more favorableterms and simplify repayment, benefiting both the borrower, andthe lending agency. Major benefits include the convenience oflower monthly payments, a single fixed rate, and one payment permonth. There is a minor downside, however, students who do notconsolidate their Stafford loans will have a 6-month graceperiod after graduation to begin making payments. Students whoconsolidate must begin making payments within 60 days of theirconsolidation. Both parents and students are eligible toconsolidate student loans. The school programstreamlines repayment by eliminating different terms, repaymentschedules, and lenders. Will I be able to afford my son's college education? Carefulfinancial planning, and research should make this endeavor areality. While it is true that college tuitions continue torise, there is more financial aid available to compensate forthe increases. Ultimately, a good education is your bestinvestment. About the author:Jay B Stockman is a contributing editor for Online College LoanRefinance Resource. Visit http://www.online-college-usa.com/ formore information.
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