When Should You Consolidate College Loans?: Federal Vs Private Student Loan Consolidation

When Should You Consolidate College Loans?: Federal Vs Private Student Loan Consolidation

The large sums of money involved mean that few college graduates can afford to fully settle the balance so they consolidate college loans instead. A 2007-2008 National Post-secondary Student Aid Study (NPSAS) revealed that the median level of student loan debt amongst graduating seniors was $23,186. However, given that only 65.6% of graduates had any debt at all, the real figure for those who borrowed money is clearly a lot higher.

Why Consolidate College Loans?

The objective of private student loan consolidation is to simplify personal finances and reduce monthly student loan debt repayments. Loans are normally re-scheduled in order to increase the rate that debt is cleared or to extend the term in order to improve affordability. Neither is the wrong option as having sufficient disposable income to pay other bills is important. However, extending the borrowing term will increase the amount of cumulative interest that is paid.

Private Student Loan Consolidation

Those who have borrowed money from a financial institution, rather than the federal government, should consolidate their college loans in order to reduce debt and/or increase affordability. Interest rates have fallen considerably over the last few years so refinancing could make a considerable difference to student loan debt repayments. However, it is important to assess the amount of federal borrowing prior to consolidating. Federal student loans normally have considerably better terms.

Federal Student Loan Consolidation

Whilst a loan from the government does involve more paperwork and separate payments (each years loan creates a new account), the rate of interest is normally a lot lower than it is on a bank loan. The interest rate on a Perkins loans is just 5%. In the event of financial difficulties or problems finding employment, it is possible to defer the loan without interest accruing. Check the interest rate and terms of borrowing, not just the monthly repayment before performing private student loan consolidation.

Reduce Student Loan Debt Repayments or Student Loan Debt?

Federal or private student loan consolidation can be used to structure repayments in such a way that they fit in with the current lifestyle of the individual. When choosing to consolidate college loans, don’t reduce the term to such an extent that it leaves little room for manoeuvre in the event of a financial emergency. Think carefully before turning federal debt into a private bank loan as the terms and rate of interest are normally a considerably more favorable. Never default on student loan debt as it removes many of the options available to the struggling borrower.

Defending Against Foreclosure: Evaluating the Options

Defending Against Foreclosure: Evaluating the Options

When face to face with foreclosure, it is difficult to think about all the ramifications of the process. To get by the thought of losing a home is a hard battle, and sometimes one wants to give in to a feeling of helplessness. There are options to consider, and other avenues that can be pursued. No one wants to be denied a future home because of the black mark of foreclosure on personal credit.

Selling the Property

The owner has the option of selling the property to pay the debt named in the foreclosure. The owner can sell the property at any point before the law day or date of sale. Make sure if a buyer is found that the sale price will cover the debt and any already accrued court and legal fees associated with the foreclosure case.

Eviction/Foreclosure Intervention

There are programs available from several different agencies which can help with foreclosure. They provide mediation services, as well as grants for delinquent conventional mortgages. They can also provide negotiation of mortgage-holder agreements and payment rescheduling.

Grant eligibility is normally based on income, income percentage used to pay for housing, availability of funds, why the account fell into arrears, and the owner’s future ability to make payments on time. The amounts of the grants are normally in the range of only $1200, and the grant, in addition to any other funds gathered by the owner, must be able to resolve the foreclosure. Mediation is open to everyone who is facing foreclosure. Check with the local state and city programs for specific information.

Deed in Lieu of Foreclosure

If there is no chance of selling the home, or there is no equity in the property, the owner might consider Deed in Lieu of Foreclosure. What happens is that the owner turns the deed to the property over to the bank or lender. If the lender or bank accepts the deed, then the bank or lender will forego the whole foreclosure process. The main benefit of this option is that there will not be a foreclosure on the owner’s credit. Seek legal advice from a state certified attorney before pursuing this option.


Court Protection for Unemployment and Underemployment

If the owner is unemployed or underemployed, one may be entitled to court protection. If the protection is granted, it will suspend and postpone the foreclosure for up to six months. To decide whether or not one is eligible for this protection, check the state’s specific requirements and their definition of underemployed as these vary by state. In addition, there must be a realistic chance of earning more money in the future, which will allow the owner to pay both past and upcoming payments. One will need the assistance of an attorney to file for court protection.

Please note that these protections only apply to first mortgages on personal residences that have been owned for at least two years.

Getting an Extension

If more time is needed to sell the home or to pay off one’s debt, which is called redemption, a motion to reopen can be filed. The owner will have to state the reason for the request, and explain the plan to redeem and when in detail. The owner must file the motion and be heard before the law day or date of sale. Keep in mind court delay between filing and when a hearing can be scheduled. One must attend the hearing personally, and it is suggested that the owner bring or have the advice of legal counsel.

Consider all the options before taking action. It is highly recommended that one contact and retain an attorney for the foreclosure process. Discuss the options with the attorney and move forward with actions that one is comfortable with taking.