There are a number of benefits that come from meeting qualifications for a Stafford loan. With a standard loan of this type, after meeting eligibility, you would be approved for a subsidized or unsubsidized loan. Unfortunately, some people shy away from considering any type of financial aid loan because of high interest and strict repayment plans. However, because a Stafford loan is backed by the Federal Government, not only is the interest fixed but it is also low. In addition, a loan of this kind comes with several repayment plans, as well as plans in case of potential default.
Just imagine being able to get financial aid in the form of a Stafford loan without having your credit checked but also being in a position of not making payments until you have graduated from college, reduced course load to less than half-time, or dropping out, regardless of reason. Additionally, with high loan amounts being available each year, you can see the value that comes from securing financial aid in the form of a Stafford loan.
Okay, so what happens if you have other student loans secured from private lenders? Let us say you started college by going through a bank or credit union but now, you want to get enrolled for another year of college, return to college after taking a short break, or you have interest in pursuing a Master’s degree or higher. You realize that taking out a Stafford loan would be a much better option but you still have the other loans looming overhead. In this case, a Stafford consolidation loan would allow you to roll your private loans and your new Stafford loan or outstanding Stafford loans into a single loan, thereby making payments much easier to manage.
Without doubt, a Stafford consolidation loan is a practical solution that would save significant money. In fact, depending on the amount and type of loans being rolled into this one loan savings anywhere between 30% and 50% is possible over paying each loan individually. If interested in a Stafford consolidation loan, it would be important to research information pertaining to your existing loans first. For one thing, make sure you would not be charged a prepayment penalty. Second, it would be worth asking the other lenders if they would reduce the interest rate in return for rolling everything into a Stafford consolidation loan, which many will.
The example of savings shown below is based on current numbers but obviously, if you were to roll outstanding loans into one Stafford loan next year or the year after, numbers would change. However, this information will provide you with a glimpse of how beneficial a Stafford consolidation loan could be from a financial perspective.
• Total Loan Amount – $30,000
• Current Monthly Payment – $350
• Consolidation Monthly Payment – $225
• Savings per Month – $125
• Total Loan Amount – $40,000
• Current Monthly Payment – $460
• Consolidation Monthly Payment – $275
• Savings per Month – $185
• Total Loan Amount – $50,000
• Current Monthly Payment – $575
• Consolidation Monthly Payment – $350
• Savings per Month – $225
• Total Loan Amount – $75,000
• Current Monthly Payment – $865
• Consolidation Monthly Payment – $490
• Savings per Month – $375
• Total Loan Amount – $100,000
• Current Monthly Payment – $1,150
• Consolidation Monthly Payment – $650
• Savings per Month – $500
For whatever reason, a large number of potential and existing college students are unaware that a Stafford consolidation loan is even an option. The truth is that in addition to a standard Stafford loan and a Stafford consolidation loan remember that many other Government financial aid solutions are available. Therefore, if you dream of earning or finishing your college degree or want to earn a more advanced degree on top of the one you already have, before turning to private lenders it would be worth checking out programs through the Federal Government.