SOURCE: NextStudent

January 24, 2008 12:56 ET

Borrowers Who Consolidate Their Federal Student Loans Can Lower Their Payments by up to 42% and Get up to 20 More Years to Repay

PHOENIX, AZ--(Marketwire - January 24, 2008) - Parents and former students with outstanding federal college loans could get up to 20 more years to repay simply by consolidating their eligible federal parent or student loans. With more time to pay off their college loans, borrowers may be able to cut their monthly student loan payments by up to 42 percent. Federal student loan consolidation also allows borrowers to lock in a fixed interest rate, replacing their variable-rate college loans with a fixed-rated consolidation loan.

With the federal student loan consolidation program, borrowers can combine all their eligible federal parent and student loans into one single fixed-rate consolidation loan with one lender, one monthly bill, and one fixed monthly payment, putting an end to multiple student loan bills, multiple due dates, and multiple monthly payments to multiple lenders. There are no application fees, no processing fees, and no credit checks required for a federal student loan consolidation.

Federal student loan consolidation eliminates the uncertainty of variable interest rates. Parents and students who took out any PLUS parent loans or Stafford student loans prior to July 1, 2006, are subject to variable interest rates that adjust every year. By consolidating their college loans at a fixed interest rate, parents and former students can prevent rate increases and rising payments on their variable-rate federal PLUS and Stafford loans.

Borrowers may also be able to cut their monthly student loan payments by up to 42% when they consolidate their college loans. For example, estimated monthly payments on a $75,000 Federal Consolidation Loan fixed at 7.25% and repaid over an extended term of 30 years are $512, versus estimated monthly payments of $879 on a $75,000 Federal Stafford Loan issued at 7.22% and repaid over 10 years -- a 41.8% reduction in monthly payment amount. (Actual payment reduction may vary and will depend on the terms of the student loans being consolidated.)

Both PLUS and Stafford loans are issued with standard repayment terms of 10 years. Depending on the total outstanding balance of their education debt, borrowers who consolidate these federal parent and student loans into a Federal Consolidation Loan may be able to get up to 30 years to repay the student loan consolidation. There are no prepayment penalties on a Federal Consolidation Loan, so borrowers who consolidate their parent or student loans won't be assessed any additional fees for paying more than the minimum each month or for paying off their student loan consolidation early.

Borrowers who have private student loans in addition to federal student loans won't be able to consolidate their private student loans through the federal student loan consolidation program. However, borrowers may be eligible to consolidate their private student loans separately with a Private Consolidation Loan, available from NextStudent, a leading Phoenix-based education funding company.

About NextStudent

NextStudent is dedicated to helping students and their families find affordable ways to pay for college. NextStudent offers one-on-one education finance counseling and has a portfolio of highly competitive education finance products and services, including a free online scholarship search engine, federally guaranteed parent and student loans, private student loans, both federal and private student loan consolidation programs, and college savings plans.

Borrowers can apply for a NextStudent Federal Consolidation Loan in minutes online or over the phone. It's fast, easy, and free to apply, and there are no fees, no credit checks, and no co-signers required.

For more information about NextStudent and its student loan programs, please visit our website at

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