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Posted in Student Loans
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JesseReiman

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Consolidating and understanding student loans
I currently have about $50k in student loans. I have been making my payments on time for two years now and I feel like I am not getting anywhere. Does anybody know of any student loan consolidation companies out there who have lower interest rates than the bigger banks and that will work with you if you don't have the best credit? Also, can someone help me understand how my payments are split up between interest and principal please?

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Student Loan Consol.

I recomment getting a consolidation loan through the US Dept. of Education. You can consolidate any Federal Direct Loan (Stafford, etc), but not a private bank loan/Plus loan. The process is easy and takes about 4-6 weeks to have the loans consolidated. You can start it over the phone with them and they will explain the process. The interest rate will depend upon what the interest rates are on your current loans. I can't remember how it is calculated, but the info is online (make sure it is the federal .gov website, not some other). Even if you are living like a monk, I don't see how you will pay off such a huge debt burden and ever qualify for a house mortgage, etc. Anyone who is employed by a 501(c3) entity is eligible to enroll in the (federal) Public Service Loan Forgiveness Program. The information is online and you can print out the application. All you need from your employer is for them to verify that they employ you full time (at least 40 hrs. per week). You send in the application + employer verification and the program will check on your employer's tax exempt status and inform you if you are indeed eligible. After you have made 120 consecutive, on-time, stipulated payments, the rest of your loan debt will be forgiven. This applies to loans from 2007 onward, when the law was passed. The first people to receive the loan forgiveness will not be eligible (to have debt balance forgiven) until 2017, and so I'm hoping that a law will be passed before then which will exempt the forgiven balance from being taxed as unearned income for the borrower. You cannot pay it off early--the whole point is to assist those who are employed in working for non-profits--teachers, nurses, public service employees, etc. The website says that periodically they will inform you of how many payments you have made towards the 120 (10 years). Important--go to the official US Dept. of Ed. Finaid website and not to some for-profit company link. Good Luck!

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