Student Loan Consolidation Company

If you are looking for a student loan consolidation company, you need to look no further. Your student loan consolidation company is the company with whom you already have your student loans. If you have federal student loans not only is the company you must use for your loan consolidation set, but so is the interest rate. The interest rate for your consolidated loan will be the weighted average of the interest rates for your individual loans. The good news is that for federal student loans the interest rates are reasonable and are fixed by law. Furthermore, for federal loans you are guaranteed a consolidation if you ask for one, and the student loan company cannot turn you down. You also have other rights, such as the right to defer your consolidated loan if you find yourself in financial difficulty and cannot pay your installments for a while. Also, if you happen to lose your job or have a long debilitating injury you can set up a payment schedule that is based on your actual income with very low payments. The trouble with this kind of arrangement is that it will take much longer to pay off the student loans, and there is no escaping paying off student loans, even through bankruptcy. Of course taking a longer time to pay off the loans means that eventually more interest will be due. All this, however, is better than letting your student loans go into default.

For private student loans none of the benefits mentioned above apply. That is, there is no guarantee that you will be granted a consolidation for your private loans, there are no limits on the interest the lender can charge on a loan consolidation even if the loan company agrees to grant you one, there are no guaranteed provisions to defer payments if you run into a difficult financial patch, and there are no rights to have your payments be adjusted according to the actual amount of income you are earning. If all this makes it sound to you like federal student loans are a better deal than private loans, you would be correct. And on top of that there is another major factor, and that is interest rates. Interest rates for federal loans are in most cases set by law at 6.8% right now, and you can be sure that rates on private loans will be significantly higher than that. Students would do well to make every attempt to avoid private student loans.

So if you have taken out a number of student loans to finance your college education, and you have graduated and are thinking about consolidating all those loans into one, you do not have the right to shop around and find the loan company that will offer the lowest rates. The student lending industry has managed to influence Congress to pass laws on their behalf that are detrimental to student borrowers. Making it against the law to refinance student loans with the lowest bidder you can find is just one example of that. Another significant example is the change in the laws during the Bush administration eliminating student loan debt from discharge through bankruptcy. Most other types of debt are dischargeable in a bankruptcy proceeding, including credit card debt and even gambling debt, but student loan debt is not. This has given student loan companies and the collection agencies they own enormous leverage over borrowers, and the result is that many student loan borrowers who have let their loans go into default are under tremendous pressure from bill collectors who can be extremely aggressive.

So to sum it up, student borrowers have no rights to simply refinance their loans for a lower interest rate if they find a willing lender. If you have federal loans you are in pretty good shape, and the student loan consolidation company, which is the lender you already have, is under a number of restrictions. If you are trying to consolidate private student loans, you are essentially at the mercy of your lender in terms of whether or not they will do a consolidation in any case, and if they do agree to this, the terms. Pay close attention to the interest rates for your new consolidated private loan- they are likely to be substantially higher than they were for the individual loans you took out.