How to Convert a Non-Subsidized Student Loan
Non-subsidized student loans, also referred to us unsubsidized student loans, are a category of student loans guaranteed by the federal government. BusinessDictionary.com defines a non subsidized student loan as “a loan in which interest is applied as soon as money is dispersed to a borrower. With an unsubsidized loan, the borrower will be charged interest on top of interest that has already accrued on the account.” Non-subsidized student loans are not based on financial need; they are availed to those students who do not require a subsidy on the interest levied on the student loan. A non-subsidized student loan cannot be converted into a subsidized loan. However you can convert the loan into a fixed interest rate student loan through consolidation.
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Instructions
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Analyze the options available to you to arrive at the best financial solution to your student loan debt. Federal Student Aid states, “While loan consolidation can simplify loan repayment and lower your monthly payment, it also can significantly increase the total cost of repaying your loans. Consolidation offers lower monthly payments by giving you up to 30 years to repay your loans. But, if you increase the length of your repayment period, you'll also make more payments and pay more in interest than you would otherwise.” One distinct advantage of converting the loan is that you will pay a fixed interest rate for the duration of the loan and the payments will be spread over a longer period, making them easier to afford.
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Ensure your loan repayments are up to date. Converting a non-subsidized loan to a consolidated repayment plan is much easier if all your previous repayments were made on time and are up to date. Defaults on the repayments will lead to disqualification of your application. Log on to the Federal Student Aid website, which contains a checklist of requirements for successful application for conversion of a student loan to a consolidation plan.
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Contact the U.S. Department of Education to inquire about the requirements and qualifications for non-subsidized student loan consolidation. Federal unsubsidized loans qualify for consolidation. For the loan to be eligible it must be either in the grace period, i.e., six months after graduation, or under repayment. Ensure you meet all the requirements necessary for loan consolidation before submitting your application. Apply online at http://www.loanconsolidation.ed.gov/ or request a mailing package to be sent you by emailing consolidation@mail.eds.com. Be patient, as the approval process takes some time.
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Tips & Warnings
Do not consolidate your federal student loans into a private consolidation loan or you will forfeit all your federal student loan rates and options.
