Student Loan Consolidation Options

Different Choices for Different Needs

Once you've finished school you may find yourself hit with lots of different type of student loan debt that you acquired right along with your degree. Which type(s) of debt you have will determine your options for student loan consolidation. Some of the choices are more beneficial than others, which is why it is important to pay attention in school to the types of debt you are signing onto in order to help complete your education. We'll discuss some of the most common student loan consolidation options here.

Federal Student Loan Consolidation

Just as the Federal government had plans and programs to help you get through your college education, it also has plans and programs to help you pay off the debt you now owe after graduation. Federal student loans from varying sources can be consolidated into a single loan for easy payment. Your new interest rate for the loans will be based on a formula set by the government; an average of the loans you current have and applicable at the time you fill out the application for consolidation of your loans. Typically private student loans cannot be consolidated with Federal student loans.

Simple Private Student Loan Consolidation

If you have private student loans, you can do a simple consolidation of the loans into a single loan that will be easier to manage. This option does not provide for any fancy extras like extending your terms or changing the amount of your payment, it basically is a straightforward merging of many loans into one and will leave you with what is the one benefit of such a loan - a single payment for about the same amount you were paying each month to the individual loans.

Extended Student Loan Repayment

You can consolidate your student loans into an extended payment plan that will give you up to 30 years to finish making your payments. The availability of time that you will be given can vary by lender so if you have this type of lender in mind, be sure to ask them up front what their limits are for extended loan repayment terms. The upside to this type of loan is that it can give you a good deal of time to repay your loan, thus lowering y our monthly payment each month. The downside to this loan is that the longer you have to pay your loan, the more you will end up paying in interest on the money you owe.

Income-based Student Loan Repayment

A few lenders out there will offer repayment of a consolidation based on your income level, which means that you will agree to pay a small flat amount each month plus a percentage (usually 2-5%) of your income toward the loan. This type of repayment plan is most useful for those who may be struggling with a low income right after graduation but have reason to believe that their income will increase substantially over a short period of time such as those students engaged in post-graduation internships that will become regular, full-time employment after a period of time.

If these are not reasons for you to fix your student loans, we have provided these alternative consolidation options.