Benefit of consolidating student loans


Federal consolidation loans allow borrowers to combine several federal student loans into one loan to streamline loan repayment.The monthly payment amount may decrease because repayment can be spread over a longer time period.To be eligible for Federal Loan Consolidation, borrowers must have at least one loan from the Federal Direct Loan program or Federal Family Education Loan (FFEL) program that is not in an “in-school” status.

As you weigh the pros and cons, keep in mind that timing is critical.

With just a few exceptions, you get only one chance to consolidate with the government loan programs.

Direct consolidation loans are now the only type of federal student consolidation loan.

Under the Direct Loan Consolidation Program, you can consolidate Subsidized and Unsubsidized Stafford Loans, Supplemental Loans for Students (SLSs), Federally Insured Student Loans (FISLs), PLUS Loans, Direct Loans, Perkins Loans, Health Education Assistance Loans (HEALs), and just about any other type of federal student loan.

Last week, we published a report on student loan affordability, which discussed the low levels of activity in the student loan refinance market. Should I refinance my private student loan into one with a lower rate?