How Does One Consolidate There Student Loans

Consolidations are very similar to refinancing a loan, such as a mortgage. You can consolidate all loans, just some, or even just one of your college student loans. Consolidating with one of the federal college student loan programs may be a good strategy to help lower your monthly payments or to get out of default, however, it is not always a good idea.

Until July 1, 2006, interest rates on federal college student loans were variable, changing according to a formula every July 1. Consolidations will lock in a fixed rate based on the average interest rates of all the student loans included, creating one student loan with a single rate, and often, significant savings in interest over the life of a student loan. Student loans made after July 1, 2006 have a fixed interest rate of 6.8%, so consolidating newer student loans may not save very much in interest.

A s you weigh the pros and cons of consolidating your student loan, keep in mind that timing is critical. With just a very few exceptions, you get only one chance to consolidate with the government college student loan programs.

It is very dangerous to consolidate federal college student loans into a private student loan consolidation. You will then lose your rights under the federal college student loan programs once you choose to consolidate with a private lender. These rights will include deferment, forbearance, cancellation, and affordable repayment rights. Federal student loan consolidations generally have lower interest rates.

Federal Government Loan Consolidation

Student loan consolidations are available through both the FFEL and Direct Student Loan programs. With a few very important exceptions, the terms of the two consolidation programs will be the same. One of the most important differences is that the Direct Student Loan Program has a more flexible income contingent repayment plan.

Under the Direct Student Loan Consolidation Program, you can consolidate Subsidized and Unsubsidized Stafford Student Loans, Supplemental Student Loans for Students (SLSs), Federally Insured Student Loans (FISLs), PLUS Loans, Direct Student Loans, Perkins Student Loans, Health Education Assistance Student Loans (HEALs), and just about any other type of federal financial student loan. Student loans that are not eligible for consolidation include state or private student loans that are not federally guaranteed.

Although all of these different student loans may be consolidated, you must have at least one outstanding FFEL or Direct Student Loan to obtain a Direct Student Loan Consolidation. This means, for example, that a Perkins Student Loan on its own cannot be consolidated into a Direct Student Loan. If the qualifying loan is a FFEL student loan, you must also certify that you were unable to obtain a FFEL Consolidation or unable to obtain a FFEL Student Loan Consolidation with acceptable income sensitive repayment terms and that you are eligible for the Income Contingent Repayment Plan.

FFEL Student Loan Consolidation lenders do not have to include non-FFEL student loans in a new consolidation loan. However, they may do so at their discretion. Non-FFEL student loans cannot be consolidated into an FFEL student loan consolidation without an FFEL student loan being included in the consolidation. Many FFEL lenders are no longer making student consolidation loans. You should not let your FFEL student loan lender discourage you from consolidating with the Direct Student Loan program if you think this is a good option for you.

You can consolidate with either program during the grace periods, once you have entered repayment, or during periods of deferment or forbearance. Borrowers in default may also consolidate in some circumstances.

Student loan consolidation was previously available to borrowers while they were still in school. However, Congress eliminated this right in 2006. You can consolidate during the grace periods. Congress has also eliminated joint consolidations for spouses, effective July 1, 2006.

High School Student’s Life Changing Semester Under Sail

Steve Carey
The following newspaper article, written last week, features a student from our sister Canadian organization, Class Afloat. It details the life changing experience that the high school student went through while on board his semester-long voyage.

Most high school students duck homework assignments or tasks like taking out the garbage. Victoria teen Karl Jensen dodges cyclones.

“In the Northern Atlantic this time of year there’s hurricanes and pretty rough weather,” says Jensen, 17, who just completed a life-altering 145-day tour of duty on the tall ship SV Concordia.

Although they didn’t have to sail through any of those storms, challenges were plentiful.

One night, the order came in to Jensen’s watch to furl all sails because of the weather. It’s not a tough task, provided you have 20 to 30 crew members to climb the four masts and furl more than a dozen sails. The seven members of Jensen’s watch didn’t panic. Instead they rounded up a few more crew mates and did the task, something that would have seemed impossible a few months before.

Accomplishments like this are ingrained in his memory after travelling nearly 15,000 nautical miles with West Island College’s Class Afloat, an East Coast boarding school and sailing adventure for Grade 11, Grade 12 and gap year university students. For the first semester, they attended classes in Lunenburg, N.S., in a schoolhouse built in 1895. During the second semester, the 39 students crewed a 57.5-metre tall ship under the supervision of eight professional staff.

In his five months at sea, Jensen saw things that wouldn’t look out of place in a movie — schools of flying fish smacking the mast and landing on the deck, orange and pink sunsets in the Caribbean, cyclones drifting toward the ship. He played golf on a tiny island in the middle of the Atlantic Ocean, drank Amazon estuary water at an equator-crossing ritual and visited Tristan da Cunha, the most remote archipelago in the world.

Jensen, an Oak Bay High School student and avid sailor, saw a poster advertising Class Afloat. He was intrigued, but knew he

couldn’t afford the $39,500 tuition. But he took the initiative, applied for a scholarship, and won.

The sailing coach at the Royal Victoria Yacht Club, Steve McBride, has coached Jensen and other students who have gone into Class Afloat and the Sail and Life Training Society programs. He says the most profound change is increased confidence and interpersonal skills.

“Karl was a very in-charge, very capable person before he left, but since he came back he’s very relaxed, very comfortable within himself,” says McBride.

The longest stretch the group was away from a port was 29 days. For days, the only distinctive feature was the horizon. If there was a tanker or other boat, everyone rushed on deck. Jensen says it was like being in a separate world, one without time.

While the students were in Namibia, Africa they spent time with orphans and distributed toothbrushes, floss and toys to the kids, as well as condoms to adults in the community to prevent the spread of HIV and AIDS.

While visiting a school house, what stood out was the ripped up alphabet on the wall and the fence outside — covered with barbed wire and glass.

“I asked a teacher what it was about, and she said it was ‘to keep the kids in,’” says Jensen. He also toured a village there, where homes were made of scavenged street signs. Seeing “how people can be completely neglected in an area” has opened Jensen’s eyes to poverty.

“You see the homeless downtown, but you don’t really understand, you pretty much just walk by,” says Jensen. “But here, you’re affected by the people, you develop a relationship with them, and have a conversation about what they’ve done.”

“[Karl] came back with a bunch of cool stories, he learned a ton, and it’s really helped him evolve as a person,” says Alex Dodd, who has known Jensen since they were both five years old.

“He’s realized that life is more than the narrow view of school-work-homework.”

The trip has made Jensen realize how small the world, and Victoria, are. In Lunenburg, Jensen met a former teacher from Oak Bay High and in Africa, he met a man who had moved there from Victoria.

Jensen says the most important thing he learned was how to overcome any challenge.

“At the time, you think it’s the most incredibly difficult thing to wake up in the morning, clean the ship, go do classes, go do manual labour. Eventually you just push past it and really prosper in the environment.”