Start of College Loan Repayment Season.

Grads Urged to Learn Repayment Option Facts

SAN DIEGO -- Repayment booklets arrive in the mailboxes of recent college graduates this month, marking the start of a new debt repayment season. It's a season that is unlikely to bring comfort or joy to many borrowers. According to the Department of Education, the average four-year college student graduates with $19,300 in debt; debt levels for graduate and professional students are even higher.

Ryan Katz, CEO and co-founder of Goal Financial, a leading education finance firm, says this debt burden can have broad repercussions. "Student loan debt can limit the ability of young professionals to buy a car, rent or buy a home, pursue their choice job and even start a family," Katz said. "Recent grads who want to maximize their personal and professional flexibility need to address their debt as soon as possible."

One way to make student debt more manageable is to consolidate eligible federal student loans. Katz says individuals can reduce their monthly payments by up to 51% through consolidation, which helps graduates take advantage of fixed interest rates and can spread the life of the loan over a 10 to 30 year period.

"Extending the life of the loan can make a big difference," according to Katz. Research by the Project on Student Debt found that most recent graduates will "find it difficult to repay" large debt amounts "within a ten-year loan period". Consequently, Katz says, "Extending the duration of the loan not only lowers current monthly payments, it also moves the bulk of the loan into the individual's prime earning years."

Katz says recent graduates with substantial debt will benefit by knowing the five key facts of Loan Consolidation.

1. Loan Eligibility

Loans from both the Federal Family Education Loan Program and the Federal Direct Loan Program may be consolidated. These loans include Stafford, PLUS, Perkins, Health Education Assistance Loans (HEAL), Supplemental Loans for Students (SLS), Nursing School Loans (NSL), Health Professional Student Loans (HPSL), and existing consolidation loans when included with additional eligible loans. Private student loans cannot be consolidated with federal student loans; however, they can be consolidated separately.

2. No Credit Check

No credit check is required for consolidation of Federal loans.

3. Interest Rates and Fees

Interest rates are fixed for the life of the loan. They are based on the weighted average of the interest rates of the loans being consolidated rounded up to the nearest 1/8th % or 8.25%, whichever is less. There are no application fees.

4. Repayment Options

Borrowers can typically choose a preferred consolidated loan pay back method:

* Standard Payment: Monthly payments, consisting of both principal and interest, are equal throughout the life of the loan (except for the last payment, which may be slightly higher or lower).

* Graduated Payment: Monthly payments start smaller and gradually increase in stages over the life of the loan. The total loan cost is higher than the standard payment plan.

* Income-sensitive Payment: Monthly payments are calculated annually as a percentage of gross income. This allows loans to be paid off based on how much income you earn each year. With income-sensitive repayment, the total loan cost is generally higher than the standard repayment plan.

* Extended Payment: Available to borrowers with more than $20,000 in loan debt. Monthly payments may be repaid over a 20-year period with a choice of standard or graduated payments to keep payments affordable. Graduates with more than $40,000 can extend the loan period to 25 years and with more than $60,000, to 30 years. The total loan cost of extended repayment is higher than that of standard repayment.

5. Borrower benefits.

Some lenders offer money-saving interest rate reductions when payments are made through auto-debit and/or for making a certain number of payment on-time. Be sure to ask for them. These benefits could save hundreds or even thousands of dollars over the life of a loan.

Goal Financial LLC is the top direct-to-consumer education financing company and one of the largest holders of federal student loans in the United States. Since 2001, Goal Financial has tailored education financing packages for hundreds of thousands of students and their families. Goal Financial counseling is available seven days a week. It also provides in-depth online information about education financing at www.goalfinancial.net.