Student Loan Consolidation

Student loan consolidation is like a refinance, with a new combined loan paying off the old loans. This also reduces the number of monthly loan payments. A consolidation loan simplifies repayment by replacing multiple loan payments with a single loan payment.

While private student loans cannot be included in a federal consolidation loan, one can consolidate the federal and private student loans separately. Federal education loans, such as the Federal Perkins loan, Federal Stafford loan and Federal PLUS loan, may be included in a federal consolidation loan. Non-federal education loans, such as private student loans (also known as alternative student loans) and state education loans, may also be included in a private consolidation loan.

There are many reasons why a borrower should or should not consolidate his or her student loans. Some of the more important reasons to consolidate include simplifying repayment, reducing the monthly payment and getting a lower interest rate. Some of the more important reasons against consolidation include the increased cost associated with a longer repayment term, loss of the ability to target the highest-rate loan for quicker repayment and the loss of the remainder of the grace period.

Helpful Student Loan Consolidation Links: