Why Consolidate Your Student Loans?

It's January of your senior year and time to start thinking
about all those loans you took to help pay for college.
Between Stafford Loans, Perkins Loans and all the rest,
between subsidized and unsubsidized you begin to realize
that a year from now you will have run out of grace period
and have to start paying back all those loans. You're going
to be paying back eight different loans at eight different
interest rates and eight terms. It's time to start thinking
about a student consolidation loan.

A student consolidation loan could be worth it just to
simplify your repayment schedules. But more importantly, if
you can get a loan with a lower interest rate than you are
paying on your school loans, then you can save yourself
some money. If the consolidation loan extends the length of
your student loan payback term, then it may have the added
benefit of lowering the monthly payment now (when you
aren't making a large salary). You can always increase your
payments as your salary grows.


How to Consolidate Your Student Loans

After deciding to consolidate your student loans, the next
step is to figure out how to go about it. You may have
several choices of lenders, and what you choose could affect
the amount you ultimately pay. Choose carefully.

The Department of Education provides the Federal Direct
Consolidation Loans Program. Numerous states have student
consolidation loans, some for your federal loans and others
for your state loans. Then there are private lenders
offering consolidation loans as well. You might first check
with your current loan providers to see what they have to
offer. They may have a better deal for current customers.

Federal Direct Consolidation Loans

Federal Direct Consolidation Loans are run by the US
Department of Education and provide a means to combine
multiple Federal loans into one.

You can apply online for the Federal Direct Program by
visiting http://loanconsolidation.ed.gov.

State Student Consolidation Loans

Several states offer consolidation loans as part of their
education loan programs. Check with your state to see if
they have a loan consolidation program.

Private Student Consolidation Loans

Private loans can not be consolidated under the Federal
Direct Plan. If you have private loans that can't qualify
for the federal and state student loan consolidation
programs, there are many lenders who make private
consolidation loans available to students. Check with
your own lenders first to see if they have a consolidation
program.

Student loan consolidation is another case where a little
work now can pay off in the long run by saving you time,
money and lots of aggravation.