Students do not have things easier that the rest of us, as many would like to claim. They may not have a job to get up for, a demanding boss, a mortgage to pay and a family to upkeep, but they do have mounting debts and a small income that simply cannot keep up. Little wonder then that federal student consolidation loans are so welcome.The simple fact is that, in order to pay for the college education, students have to take out numerous college loans. Having so many individual loans makes clearing college debt a real headache, and can be a real struggle. This is where a consolidation program is of most use, reducing the headache by buying out all of the federal student loans in one go.Consolidating Federal DebtJust like any other loan, a federal loan needs to be repaid and as such can place pressure on the borrower. For students, the fact that three or four such loans can be taken out over the course of being in college, means that the pressure can become quite high. For this reason, federal student consolidation loans are necessary.There is a difference between private and federal loans, with the terms in particular making the federal option much more affordable. Usually, because it is the federal government that is supporting the financial package, the interest rate is lower than a loan supported by an independent private lender, like a bank. So, there are differing terms to the consolidation program if clearing college debt is really going to be advantageous.Buying out federal student loans and private student loans with one consolidation loan makes it hard to address the different issues of loan planning and budgeting. Keeping them separate in distinctive consolidation programs makes sense.Consolidation Loan OptionsWhen it comes to dealing with several federal college loans at the same time, there is a choice of government sponsored federal student consolidation loans available. Which one is the right one is dependent on specific loan terms and the situation that the student is in. But there are basically two programs under the Higher Education Act (HEA) to consider.The first is program that can be used in constructively clearing college debt is the Direct Consolidation Loan Program. In this program, the Department of Education issues consolidation loans to students, allowing them to pay off their existing loans. The terms of the new loans include a longer loan period, thus ensuring that repayments are much less each month.The second option is the Federal Family Education Loan (FFEL) program. In this program, the student can also get a loan from the Department of Education, but it is not restricted to repaying federal student loans. It can also be used to clear loans taken out to cover living expenses while in college.However, there are four other programs to choose from, each offering different advantages depending on the student situation. Speaking to someone in the financial aid office can help to identify the best one to choose. These four federal student consolidation loan programs are: the ICR or income contingent repayment plan; the extended payment plan; graduated payment plan; and the standard plan.Flexibility of Consolidation ProgramsThe challenge to clearing college debt is to do so at a rate that is affordable and manageable. For that reason, the consolidation programs that are provided include flexibility as a key element. The lifetime of these loans are longer, so that the principal is divided over greater number of installments.Coupled with lower interest rates, and numerous federal student loans reduced to one monthly repayment, it means the repayment can be as much as 50% of the original monthly amount.
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When an effective replacement is needed by business owners for small business finance services previously obtained from banks, there are several business financing choices to consider. An increasingly prudent alternative is for small businesses to explore whether there are effective commercial finance options to replace bank financing before they are actually needed because commercial borrowers are likely to hear multiple reports about the growing difficulty in obtaining business loans from banks.One of the chief ongoing criticisms reported by many small business owners is the failure of most banks to satisfactorily meet their routine daily commercial loan needs. Very few small businesses have the financial means to overlook the current business loan shortfall exhibited by most banks even if there has been a long and prosperous working relationship with a bank. One common (but incorrect) response is that nothing can be done to replace the traditional source of commercial financing although it does seem that the reality of less bank financing is acknowledged by many commercial borrowers. For most small businesses needing to explore immediate ways for replacing bank business loans, the three examples provided below are illustrations of practical small business finance strategies readily available to them.Among the most useful options to replace business bank financing are working capital loans from non-bank sources that do not require commercial property or other assets as collateral. To replace a line of credit which is being reduced or eliminated by a traditional bank, this type of business financing serves as a viable option. Perhaps a business borrower needs new business funding to buy supplies or inventory. A reliable source of working capital is a key ingredient for continued success for even the most successful business. Traditional banks might need to be replaced by more effective commercial lending sources because as noted both here and in media reports, banks are rarely doing an adequate job of filling this critical role.Another practical business finance choice to replace bank financing is accounts receivable financing. To bridge a cash flow gap between sales and payment from customers, this form of receivables factoring can be helpful. While this is by no means a new form of business financing, the major use has typically been by large corporations. Commercial borrowers are rapidly learning to adopt this effective financial strategy due to banks exiting their previous active role of providing small business loans.A commercial funding approach generally referred to as a credit card receivables factoring or business cash advance will also be a useful alternative for businesses which regularly accept credit cards from their customers. By allocating a portion of future credit card processing toward repayment, it is a way for businesses to receive cash now and gradually repay the amount provided.None of the working capital financing options just noted are totally free of potential complications or problems. At the same time, it should be noted that the sudden lack of reliable bank financing for small business owners is itself a major complication and problem requiring a timely solution. Before finalizing any new arrangement for business financing, the advantages and disadvantages need to be thoroughly reviewed as with any other new business service.
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