Consolidate Student Loans

Consolidate Student Loans

Consolidate Student Loans - Federal and Private

Consolidate Student Loans

The easiest way to reduce your student and school loan debt is to consolidate student loans. Student loan consolidation results in lowered debt and payments if the average interest after consolidation is lower than it is before. This is really just refinancing one or a group of federal student loans, at a lower interest rate, just as refinancing a mortgage loan at a lower interest rate would reduce monthly payments and the total amount paid.

There are two basic kinds of school loans, private and federal. Federal student loans are almost always at a much lower interest rate than you could get for an unsecured private student loan. Because of the nature of the federal student loans, you should never consolidate both private and federal student loans into a single private loan. Because only federal loans carry government backing, they can be refinanced at a much lower interest rate than can privately financed student loans. So when you come to consolidate school loans, do the federal loans together then look at consolidating your private student loans.

Consolidate Student Loans - Federal

Requirements to consolidate federal student loans when:

You are no longer enrolled in school full time, less than half time

You must be in the "grace period" of the loan or must be actively repaying your loan.

Most consolidation companies require a minimum loan amount, usually $10,000 is typical.

Consolidate student loans in two categories, Federal and Private

The difference between federal and private student loans

Federal student loans have advantages over private loans. For example, interest on the loan is tax deductable, the loan can sometimes be forgiven for certain types of service, and you can sometimes defer payments on the federal loan if you go back to school.

Private loans don't have these advantages - they are really just loans either secured or unsecured, and you have to pay them back just like any other loan.

So, it's important to not consolidate federal and private loans together. Consolidate all your federal student loans first, then separately consolidate your private loans. If you were to mix the public and private loans you would have to take out a single private loan that loses all the benefits of the federal loans.

Student Loan Consolidation

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Consolidate Student Loans

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