Fight the Financial Crisis With Student Loan Consolidation

The financial crisis that is sweeping not only our country, but the entire world, is causing most people to feel burdened as they continue working but paying out higher costs just to live. If you have an adjustable rate mortgage, chances are you are really struggling to make ends meet and keep your home at the same time. Add on thousands of dollars in student loans that you are paying on, and you are probably feeling like you are at the end of your rope. You can fight the fallout of the financial crisis by consolidating your student loans.

Student loan debt is often upwards of $50,000 by the time a student graduates. Entry-level positions that the graduate takes after they receive their degree often do not pay enough for the student to meet all of their living expenses as well as pay monthly payments to multiple student loan lenders. Falling behind on your student loans, however, can affect not only your credit rating, but can also cause your tax refund to be taken each year and could even result in garnishment of your wages.

Although each state differs in their garnishment laws, most are barbaric to say the least. In the state of Kentucky, for example, a weekly garnishment order allows the garnishee to keep only $154.50 of their weekly income- the rest goes to the creditor who is owed money. No one can live on that amount of money. Also, student loan debt does not qualify for dismissal in bankruptcy proceedings - so this is a debt that will haunt you pay or you become disabled or die.

Consolidate Now - Avoid Potential Negative Consequences

You can avoid all of these instances by consolidating now. A student loan consolidation works much the same as any other consolidation loan. You will take out a new loan that covers all of your pre-existing balances on your student loans and pays them off in full. In turn, you will pay your new lender one payment each month for all of the money they have loaned to you. It is a very simple process, and one that can save you hundreds each month that you can use for other things - like paying your mortgage or buying groceries.

Government Consolidation Can Save You Money

There are various sources for student loan consolidation. An often overlooked source is the United States Department of Education. To qualify for loan consolidation through this government agency, you must have had a federal education loan, such as a Stafford or Perkins loan - which most students do.

Doing your student loan consolidation with the U.S. Department of Education can save you tons of money because the rates they charge are often less than what you will pay with other student loan consolidation services, and there are often friendlier terms offered by the government in the instance that you might go into forbearance on your student loans, or even become disabled.
Government consolidation loans will take into account your current income, size of your family and number of dependents. You can consolidate for up to thirty years, or for as few as twelve. All students looking to consolidate should consider checking with the Department of Education while shopping for their student loan consolidation servicer.

Additional Online Savings

Private lenders also offer consolidation services for student loan borrowers. There are many fine and reputable lenders who will consolidate your student loans with great rates and affordable monthly payment options. A number of these lenders do their business online via the Internet, and are certainly worth looking into.

U.S. Said to Give $60 Billion Student-Loan Backing

The news I had read via Bloomberg on 29 Jan reported that U.S Treasury agreed to commit as much as $60 billion to shore up the market for student loans and help reduce the illiquid assets clogging banks’ balance sheets.

They will use Federal Financing Bank to provide a backstop for an initiative put together by Citigroup Inc. and Morgan Stanley. The loan will be able to purchase existing and new student loans from banks, and issue asset-backed commercial paper to finance itself.

That effort, called the Term Asset-Backed Securities Loan Facility, is scheduled to start next month (should be this month – February). Loans that are guaranteed by the Education Department’s Federal Family Education Loan Program are eligible for the effort.

For the full news, read it on Bloomberg.

How Obama's New Plan Help You Pay for College?

President Obama’s economic stimulus package tends to focus on the economy’s most ailing parts — housing and employment — but if the president gets his way, families may see some relief in paying college bills, as well.

The package aims to spend $125 billion on education over the next two years. Should it pass, billions will be spent on education at every level, from early education and Head Start programs for underprivileged kids, to universities and college students seeking loans and grants.

For families with children heading off to college, the fate of the bill could make a big difference in how they fund next fall’s tuition bill. Read the answers to some key questions about the president's proposal on Smart Money.