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Consolidation
STRETCHING YOUR INCOME THROUGH LOAN CONSOLIDATION
Can I combine my loans to make repayment easier?
The larger your loan debt, the more those monthly payments are likely to put a strain on your budget. If you're concerned about your ability to manage payments, consider doing a loan consolidation. You can go through your local bank or you can go through other banks or agencies for loan consolidation.
BEFORE YOU SELECT A CONSOLIDATION PLAN, CONSIDER YOUR ABILITY TO REPAY
Do you know the approximate entry level salary for the career you've chosen? (This information is usually available through the school financial aid office or library.) Although many circumstances may affect your ability to repay, most financial advisors agree that student loan payments should not exceed approximately 8% of your gross annual income. To find the monthly payment for 8% of your anticipated starting salary in the table below, locate the amount in the left column nearest your expected starting salary and read across to the monthly payment.
Consolidation may take two months or more to complete. After you submit your application,
continue to make regular loan payments
until you receive information that the consolidation is complete.
| GROSS ANNUAL INCOME |
8% OF INCOME |
MONTHLY PAYMENTS |
| $15,000 | $1,200 | $100
| | 20,000 | 1,600 | 133 |
| 25,000 | 2,000 | 167 |
| 30,000 | 2,400 | 200 |
| 35,000 | 2,800 | 233 |
| 40,000 | 3,200 | 267 |
| 45,000 | 3,600 | 300 |
| 50,000 | 4,000 | 333 |
The following is a repayment comparison before and after loan consolidation. This shows a 10, 15 and 20 year repayment plan. Most loan consolidation companies allow more time to repay your loan. The up side is that it will lower your monthly payments. The down side is that it will increase the amount of interest you pay over the life of the loan. In addition, you most likely will be paying a higher interest rate than what you have on your NDSL/Perkins or Health Profession loans. But, if monthly payments are a concern, loan consolidation might be the way to go. And, of course, when you are able to, you can always pay more than your monthly payment.
Please remember you cannot consolidate your institutional loans with your federal loans.
REPAYMENT COMPARISON BEFORE AND AFTER CONSOLIDATION
| | BEFORE CONSOLIDATION | AFTER CONSOLIDATION |
|---|
| | 10 years | 10 years | 15 years | 20 years |
|---|
| Principal Balance |
$ 5,000 (Perkins/NDSL's)
$ 2,000 (Health Professions)
$ 7,000 |
$7,000 |
$7,000 |
$7,000 |
| Interest Rate |
5% (Perkins/NDSL's)
5% (Health Professions) |
8%* |
8%* |
8%* |
| Monthly Payments |
$53.03 (Perkins/NDSL's)
$21.21(Health Professions)
$74.24 |
$84.93 |
$66.90 |
$58.55 |
| Total Interest Paid |
$1,363.60 (Perkins/NDSL's)
$ 545.20 (Health Professions)
$1,908.80 |
$3,191.60 |
$5,042.00 |
$7,052.00 |
| *Actual rates may be lower or higher than rates shown in this example. |
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