| Earning a college degree is one of the most | | | | are also eligible to consolidate. |
| important - and expensive - things you will do in | | | | If an individual chooses to consolidate his or her |
| your life. If you are able to attend college without | | | | federal student loans, the loans can be |
| having to take out any student loans, you are | | | | consolidated through a private lender, and the |
| one of the lucky few. Most individuals have to | | | | borrower can only consolidate again through the |
| borrow at least some of the money they need | | | | U.S. Department of Education. Upon consolidation, |
| for tuition, books, and living expenses. And upon | | | | the loan is charged a fixed interest rate that does |
| graduation, you are faced with the challenge of | | | | not change even if the loan is reconsolidated. And, |
| repaying all of those loans after the grace period | | | | with a federal student loan consolidation program, |
| ends, whether you are employed or not. That can | | | | there are no fees applied or closing costs to be |
| be a hard dose of reality when you realize that | | | | paid. This differs from private lender debt |
| not paying your loan payments on time, or not | | | | consolidation. |
| paying them at all can have grave consequences | | | | Taking advantage of a federal student loan |
| where your credit rating is concerned. That is | | | | consolidation program can be beneficial to your |
| why it is smart to consider a federal student loan | | | | credit history, by helping it stay clean. It is easier |
| consolidation program. | | | | to keep track of and remit 1 monthly loan |
| Loan consolidation entails taking out a single loan in | | | | payment than to keep track of 2 or more |
| order to pay off several others. This is done for | | | | student loan debts, especially if you move |
| convenience, as you can often get a lower | | | | frequently. And losing track of a federal loan is |
| interest rate, and you only have 1 monthly loan | | | | never a good idea. |
| payment to keep track of. It is also good for | | | | Loan consolidation is especially good if you are |
| your credit history. Often, student loans are | | | | having trouble making all of your scheduled loan |
| guaranteed by the United States government. | | | | payments on time. Defaulting on your student |
| With a federal student loan consolidation program, | | | | loans is a very unfortunate situation to be in, and |
| currently held loans are purchased and closed | | | | can lead to having property and possessions |
| either by a loan consolidation company or by the | | | | taken from you in order to pay the debt. You |
| U.S. government. Who handles the loans depends | | | | can also consider requesting loan forbearance |
| upon what type of federal loans the borrower | | | | from your lender, which allows you to take a |
| has. | | | | break from your payments, or make interest-only |
| The interest rates for Federal student loan | | | | payments. However, the longer you wait to pay |
| consolidation programs are very reasonable. They | | | | your debt, the longer it will be hanging over your |
| are lower than your average bank loan. They are | | | | head. With consolidation, repayment is extended |
| calculated based on the current year's student | | | | over a longer period of time which, in addition to |
| loan interest rate, and in turn calculated based on | | | | the single lower interest rate you will have on |
| the 91-day Treasury bill (a government bond used | | | | your loan, they payment are lower and more |
| as a debt-financing vehicle of the U.S. Federal | | | | manageable within your budget. |
| government) rate at the previous auction (held | | | | If you are interested in a student loan |
| every year in may) of the year. The interest of | | | | consolidation program, you can consult the U.S. |
| student loans are variable, but can not go over | | | | Department of Education, or one of the lenders |
| the maximum of 8.25% for Stafford Loans and | | | | with whom you currently have a student loan for |
| 9% for PLUS loans (Federal parent loans). | | | | information. During the application process, you |
| Student loan consolidation programs are available | | | | can learn exactly which of your loans qualify for |
| to former students who have more than a | | | | consolidation (hopefully they all do!), and be on |
| minimum amount of federal student loan debt | | | | your way to more manageable student loan |
| (usually more than about $10,000). Parents with | | | | payments. |
| more than a minimum amount in PLUS loan debt | | | | |