Stafford Student Loan Consolidation

The Federal Stafford Loan, the most common type of educational loan, is available to both undergraduate and graduate students. There are subsidized Stafford Loans, which are need based, as well as unsubsidized Stafford loans, which are not need based. To be eligible for Stafford Student Loan Consolidation you must have at least $7,500 in federal student loan debt.

Understanding Stafford Student Loan Consolidation

Stafford Student Loan consolidation allows you to combine two or more different federal loans into one to make repayment less troublesome. One lender pays off all your existing loans and makes a new loan with a fixed interest rate, one monthly payment, and an extended repayment term of up to 30 years. Payments on consolidated Stafford Loans are typically lower due to the loan being stretched out over a longer period of time than the original underlying loans.

Another benefit of Stafford Student Loan consolidation is being able to lock in a fixed interest rate for the entire length of the loan. Stafford loans carry variable interest rates that are recalculated each year. Without consolidation your rate could increase up to 8.25%. By consolidating your loans, during times of lower interest rates, you can lock in a lower interest rate for the entire term of the consolidation loan, possibly saving thousands of dollars in the process.

Generally, to be eligible for Stafford Student Loan consolidation you must not currently be enrolled in postsecondary school for more than half time. In addition to the enrollment requirement, you must be in a grace period or your loan must be currently in repayment status. You may also be in default, provided you will reenter repayment through consolidation.

Applying for Stafford Student Loan consolidation is fairly simple and requires no credit checks or fees. Consolidation loans are offered by the Direct Loan Program and the FFEL Program. The Direct Loan Program offers consolidation loans from the U.S. Department of Education. FFEL consolidation loans are available from participating banks, credit unions, and savings and loan associations. You simply gather pertinent information about your student loans, fill in an application, and wait for your approval.

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