Student Loan Consolidation Information

If you are planning on going to college, you have probably had some conversations about student loans. Applying for loans, grants, scholarships and other sources of college financial aid has become a typical part of the college application process. When your funding is secured, you can turn your attention to your end-goal: getting a college education. When you graduate, you'll have a repayment schedule to follow for all loans you have incurred. Student loan consolidation is a way to combine all of your student loans into a single loan, simplifying your record keeping and potentially reducing your monthly payment at the same time.

You'll find federal student loans and private student loans are available to you to help pay for college. There are pros and cons of each. Some of the more popular programs include:

• Federal Stafford Loans – These federal loans may be subsidized (the government will pay the interest on your behalf) or unsubsidized.
• Federal Parent PLUS Loans – This is a student loan option where the parent borrows on behalf of the student. Eligibility requirements include a credit check.
• Perkins Loans – Based on financial need, these loans are available to students who have a very limited ability to pay for college.
• Private Student Loans – There are many options for private loans, each with varying interest rates and loan terms.

Your student consolidation loan can be used to combine either all of your federal loans together or all of your private loans together. You cannot consolidate your federal and private loans together. There are many reasons to pursue consolidation, but most people seek them because the payments have become too difficult to make. A loan consolidation may help lower your payments by extending the term, lowering the interest rate, or both.

Beyond a student loan consolidation, there are other options available, should your loan burden become too great. For some loans, you may qualify for a deferment (a temporary delay of re-payment). You'll have to apply for a deferment and it will be granted based on your current situation. A deferment is typically used when a student re-enrolls in school, or some other life-changing event occurs. You may also investigate forbearance, which is a reduction in payment based on your financial situation. Forbearance may even include a delay in repayment. However, it is important to note that interest on the loan may continue to accrue.

Student loan consolidation can be an effective way to reduce your payments to more manageable terms. If you have multiple college funding sources, consider the various consolidation programs available to help you get out from under an overbearing payment schedule.