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How Can I Consolidate My Student Loans in 2015?

Americans who’ve been asking themselves “how do I consolidate my student loans” should look no further than the federal government of the United States of America for their answers. The U.S. government has a number of different programs that help former students combine their various student loans into one manageable payment.

Once your payments are combined, repaying student loans doesn’t seem as bad. Frankly, with the new interest rate and terms you’re going to receive through the direct consolidation loan and special direct consolidation loans for 2012, you’ll see lower payments and a chance to start your adult career debt-free.

Direct Consolidation Loan

The Direct Consolidation Loan is a way you can consolidate the terms and rates of you outstanding college student loans that you took out to pay your way through university. This federal aid pays off all your various debts accrued from school studies, then presents you with 1 monthly bill and 1 monthly payment. Take a handful of student loans. The terms and interest rate are likely to be wildly different.

Student Cramming for Exams

Get the Financial Stresses Out of the Way and Focus on Your Studies.

This creates a situation where you’re bombarded with student loan bills and statements throughout the month. You have to pay off each and every one of the loans each month and it’s easy to forget to pay one of them.

This hurts your credit rating and only increases the size of your ultimate payment. When you have one single loan to pay off, you get one bill per month and you write one check.

Not only that, but your overall interest rate is likely to be better than the hodgepodge of interest rates you’re going to be paying with a portfolio of student loans.

Refinancing for the sake of debt consolidation isn’t much different than refinancing the mortgage on your house. You make new terms for the loan, taking on new responsibilities, but gaining benefits from the renegotiation.

Special Direct Consolidation Loan – Obama Administration

From January 2012 until June 30, 2012, the U.S. Department of Education is offering what they call the “Special Direct Consolidation Loans”. These loans help student loan borrowers manage their post-graduation debt using one simple concept: all their debts are managed by one entity. People getting a Special Direct Consolidation Loan receive one bill a month and have one payment to pay every month. The payments actually go to paying down your debt instead of keeping you in an endless cycle of simply paying off interest.

My Student Loan Horror Story

I remember having two student loans when I went to college. When it came time to pay them off, I paid an equal amount each month, assuming they would both be paid off at the same time. (That’s actually a mistake–I should have paid off one and only the interest on the other, and then paid off the other.) After paying a year or two, I realized that I was paying down the debt on one, but the payments on the other didn’t seem to be getting me anywhere.

After studying it for a while, I realized one of the loans had much better terms than the other, though they should have had roughly the same clauses. But that’s what happens with student loans–kids who don’t know what they’re doing sign contracts with expert bankers and end up paying off their debts for years, maybe decades. I’m just happy that one of the two loan officers and/or banks I got a loan from was honest.

New Legislation in 2014

In June 2014, President Barack Obama signed an executive order which capped at 10% the amount of your student loan payments. It’s the same as what he signed in 2012 for the “Pay as you Earn” program, except this applies to most ex-college students.

The new law takes effect in December 2015. It applies to people who took out loans before October 2007 and those who stopped borrowing in the 2011.

The new loan forgiveness law is 10 years, if you work in public service. Most others still have the same loan forgiveness at 25 years. The idea is you don’t become a debtor to the banks and financial institutions for the rest of your life. No debt slavery to the banks anymore.

Consolidating Loans with Federal Help in 2015

When you consolidate bills, the consolidation loan pays off the original debts. You have a new, consolidated debt that (hopefully) has better clauses. I suggest you use the Special Direct Consolidation Loan instead of a loan from a debt consolidation company. These are loans meant to help you out of a tough situation instead of keeping you in an endless cycle of payments. The government loans come from either FedLoan Servicing or “PHEAA”, Nelnet, Sallie Mae, or the Great Lakes Educational Loans Services, Inc.

Government assistance creates equality, so everyone starts life off with somewhere close to the same opportunities. No society exists or ever will exist that completely evens the playing field, but you shouldn’t have to deal with predatory loans.

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