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The Facts Regarding Student Loan Consolidation

student loan consolidation

These days parents and students alike are looking for ways to reduce their overall financial burden by eliminating high interest student loans. One way to do that is with a student loan consolidation. This type of program allows you to pay off the balance of one or more student loans and combine them into a single student loan from one lender.

Obviously, the benefit of this strategy is that it allows the student or their parents to reduce their higher interest rates; thus lowering their total overall payments. Most federal student loans, including the Stafford, Perkins and Direct loans are eligible for consolidation.

One factor that you must take into consideration regarding a federal student consolidation loan is that when student loans are consolidated, you are actually extending the term of the loan. Normally, the repayment plan for a federal student loan is 10 years. When these types of loans are consolidated, the amount of time in which it must be repaid can be extended all the way up to 30 years. This strategy will certainly lower your monthly loan payments, but the total amount of interest you must pay will also be increased and it will take you longer to pay off the loans.

Student loan consolidation has both advantages and disadvantages and if you have been considering taking advantage of the many consolidation offers available for both private and federal student loans, you would be wise to take a look at the big picture.


  • Create a single payment instead of multiple payments
  • Lock-in a lower interest rate
  • Lower monthly payments


  • Total amount of interest is increased
  • Will take longer to pay off loans

While federal student loan consolidation program is the right answer for many students and their families, be aware that alternatives to exist. For example, some loan programs allow you to take advantage of income contingent payments as well as graduated and extended repayment plans to assist if you find you are having difficulty meeting your current financial obligations.

Even though  private student loans cannot be consolidated with your federal student loans, the following types of private student loans are eligible for consolidation:

  • Federal PLUS loans
  • Federal Stafford loans
  • Federal Direct loans
  • Federal Perkins loans
  • Federal Supplemental Loan for Students
  • Nursing School Loans
  • Loans for Disadvantaged Students
  • Federal Consolidation loans
  • Federal Insured Student loans