Consolidating Student Loans 2

Just because you are out of college does not mean that you are totally out of the woods. If you have any loans to repay, you will have to start making payments on them soon enough. One of the best ways to manage your student loan debt is by learning about government student loan consolidation.

The best thing about government student loan consolidation is that you will be able to put all of your federal education loans into one. This makes repayment much easier, and will allow you to only make one payment per month. Not to mention the fact that this may decrease the amount of money that you have to pay on a monthly basis.

Generally speaking, student loans are paid off over a period of 15 to 30 years. And with every year that goes by you will be accumulating interest as well. But if you decide to take advantage of government student loan consolidation you will be able to lock in your interest rate in order to avoid them increasing on you, which in turn will increase the amount that you owe each month.

Federal Family Education Loan (FFEL) and Direct Loan Programs are provided by the Higher Education Act. Under both of these programs, the students loans are paid off and a single loan is created.

Also, remember that even if your loans have different repayment schedules and terms that you may still be eligible for a government student loan consolidation program.

The interest rate that you can get from a government student loan consolidation loan may be much lower than any on a stand alone loan that you currently have. In turn this translates into savings for you in the long run. Your monthly payment for a government student loan consolidation loan may be lower as well because the repayment term will be extended.

Direct consolidation loans are available by contacting a participating FFEL lender. After getting everything set up, your lender will pay off your loan and you will be in charge of paying monthly on the final consolidated result.

Direct consolidation loans fall under one of three categories:

1. Direct Subsidized Consolidation Loans

2. Direct PLUS Consolidation Loans

3. Direct Unsubsidized Consolidation Loans

Even if you have loans from more than one of these categories, you will still end up with one monthly payment with a government student loan consolidation.

With the FFEL Program, you can receive either an unsubsidized or a subsidized consolidation loan. This all depends on the type of loans that you are consolidating.

Direct consolidation loans and FFEL loans both have the same interest rate; that being a fixed one that is set by the law. The rate that you receive is fixed until you pay back your consolidated loan.

Even though there are many benefits that go along with government student loan consolidation, there are also a few drawbacks as well. You will need to keep these in mind in order to ensure that you end up with what you are after.

One thing that you will need to consider is which loans you want to consolidate. For example, if you consolidate a Federal Perkins Loan you may lose some cancellation benefits that go along with them. In this case, you will want to leave the Perkins Loan out of the consolidation process.

You must also realize that while you will have a longer time to pay back your consolidated loan, interest rates will add up during this additional time. In some cases, people have found out the hard way that consolidation has doubled their total interest paid over the length of their loan.

Remember, after you move forward with government student loan consolidation you cannot go back. So make sure that you check out both the advantages and disadvantages before getting started.