Federal Student Loan Consolidation

Federal Student Loan Consolidation

What Is Federal Student Loan Consolidation?

Federal Student Loan Consolidation is a very simple and straightforward program that allows student borrowers with Federal loans, namely the Stafford unsubsidized and subsidized, Perkins, SLS and Parent Plus Loans to place them into a single loan and lower their payments, should that option be desired.  However, the compelling reason that consolidation is such an important program for borrowers to use at this time is because the Stafford and Parent Plus loans which have variable interest rates, are currently some of the lowest rates in over thirty years, and can go up in the future, resulting in higher cost if not consolidated.  The interest rate you will have in the consolidation is determined by a set federal formula, and is known as a weighted average.   This weighted average formula is set forth by the government to ensure that each and every student borrower would get equal treatment by all lenders regardless of location, lender or size of loan.  The bottom line is this, the many flyers, telemarketers and websites from the various companies that advertise lower and lower rates all have to give you the same rate on your consolidation. If you do not consolidate while the rates are low, you will eventually pay more for your loans when the interest rate increases.

Should I Consolidate my Federal Student Loan?

If you are out of school, in your grace period (the six month span of time from when you graduated or left school or went to less than half time status), and owe over $10,000 then you should consolidate. Parents of students with parent plus loans should consolidate but do not have to wait until the student is out of school to do so. 

Consolidation can do three things for you: 

  • Fix the variable rate on your loans while the rate is very low. 
  • Give you lower payments, (not a requirement, as you can pay this loan off at just about any payment you want as long as the minimum payment is met). 
  • Combine all your loans into a single easy to remember payment. 

In effect, if you want to pay your loans off in the same time span as you currently are, or you are comfortable with your existing payment, you can keep everything the same and just transfer your loans via consolidation to a lender that will fix the rate.  And, this is all free, courtesy of your Federal Government.  There are no costs, transfer fees,  or even credit checks. 

What Is The Difference Between the Various Companies and Offers?

Primarily, the differences between the various companies is this; the level of comfort you have with that potential lender/consolidator and the discounts given by the lender you select to use.  Most do not have a staff that can answer these types of questions directly, and rely on flyers with fine print explaining away low rates and pressure tactics from phone solicitors to get you to sign and send in your consolidation application before you know all the facts. 

Secret 3 Things Your Financial Aid Advisor Isn’t Telling You


A student loan is designed to assist students pay for tertiary level education, such as university tuition, books and living expenses. It differs from other types of loans because the interest rate maybe substantially lower and the schedule for repayment are usually deferred until the student has successfully completed their education....

Student Loan Consolidation – The way out of your student loan debt hell

Consolidation Rates

Decades ago, college education was quite inexpensive and it was a certain ticket for the middle class. But today all of this has changed and has become so expensive that people are not being able to afford their higher education. Living in a state that dons a double digit unemployment rate, both the students and their parents are failing to make...

Re-consolidating Student Loans – Advantages

Consolidation Rates

Upon graduation from college, students begin to think of how they will accomplish the goal of paying off their student loans. Many financial institutions are now making available to students a loan consolidation service. This service has been offered to students, as well as recent graduates, to help ease the financial impact that these loans can...

Current Student Loan Consolidation Rates

Consolidation Rates

Consolidation of student loans is a process where different types of loans taken by a student, are bound together and a student is required to file a single monthly payment to repay all loans, rather than making each slice. It is important to understand here that there are many types of costs for achieving different types of courses....

Defer Your Student Loan – Advance Your Degree and Put Off Payments

Consolidation Rates

Great news! You might not be aware that if you decide to go further within your career field and get a more advanced degree you will have the option of deferring your current student loans. This in no way allows you to get out debt free but it does give you longer repayment terms and longer that you can put off paying those payments. You can find...