Are your current student loan interest rates variable?
Having a fixed interest rate for life on a consolidation loan
will help to manage your debt.

If you’re looking for a simple way to combine all of our outstanding student loans into one convenient loan, you need to consider a debt consolidation loan. This type of loan is defined as the act of combining multiple loans into one single loan to help decrease the amount paid monthly or to extend the repayment period. This type of consolidated loan is made available to you as soon as you leave school, and may be available even while you’re still attending school. It allows you to reduce your monthly loan payments by as much as 51% and also lock in a low fixed interest rate – possibly even lower than what your current loans are set at. And most programs can be set up with automatic bill payment, making it a paperless transaction.

Student loan consolidation is a great way to manage your debt and keep a good credit score, especially if you’re having problems managing your current student loans. It helps to prevent students and parents from having to default on student loans by offering flexible repayment programs, and a fixed interest rate with lower payments. And the convenience of having one easy payment with the lower interest rate allows you to save money in the end. Also, there is no minimum amount required to qualify for a consolidation loan, and in some cases, the new loan may qualify for renewed deferment benefits. The program offerings depend on whether the student loans are Federal or Private.

Federal Student Loans

A Federal student consolidation loan allows you to borrow for the sake of combining all eligible federal student loans, such as FFELP and Direct Loans, and allows for a longer repayment period. Some that are not eligible would be those obtained through a bank or other type of financial institution, from the school you attended, personal loans taken through a friend or family member, credit cards or consumer debt.

Private Student Loans

Also known as ‘alternative loans’, private student loans allow you to borrow money for the purpose of covering education costs that aren’t being met by a traditional Stafford or PLUS loan program. These private loans help to fill in the void between savings, financial aid and general college costs, and are sometimes referred to as ‘refinancing’. A private student loan incurs fees for the borrower, whereas the student loan consolidation does not – the private companies make money on student loan consolidation by getting subsidies from the federal government.

When consolidating student loan debt, it is imperative that you explore your options, and all of the various regulations that apply to both private and federal student loans. For example, while in school, you may have taken out several different types of student loans, both private and federal. When considering debt consolidation, typically borrowers are not able to combine private and federal student loans into one loan. However, even though borrowers can’t enjoy the interest rate benefits of a federal loan on a private loan, there still are many options for refinancing that should be considered. But before you apply with a private lender, you should definitely do a comparison of offers from various lenders to ensure you are getting the best rates on a student loan consolidation. Also, there are many programs with private lenders, and most private lenders also provide Federal debt consolidation loans.

When considering if consolidating your loans can benefit you, ask yourself these several key questions:

Am I able to manage my current monthly payments?
If you are struggling to manage these payments, a consolidation loan may be able to assist with lower monthly payments and a lower interest rate.

Are my multiple payments getting confusing?
Having to send payments to various lenders every month may feel like an inconvenience. Having one simple monthly payment will help.

Do I still have a lot of payments left on my loans?
If you happen to be close to paying off your student loans, then congratulations, it doesn’t make sense to consolidate or extend your repayment period. If you still have a ways to go, then consolidating is definitely worth considering.