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Consolidating federal student loan debt

The average college graduate in 2016, who took out student loans, owes ,172, a 6% increase from 2015.That is a sizeable, unwelcome gift to take home from school and it’s important to know how to minimize the damage.For example, instead of making multiple payments to multiple lenders at various times of the month, you simplify the equation by making a single monthly payment.Learn more about private student loans Private student loans are granted and managed by lending institutions – banks, credit unions, college foundations – and typically charge a higher fixed or variable-interest rate than federally funded loan programs.The good news is that federal loans carry a six-month grace period so there is time to develop a plan for dealing with them.One of the best places to start looking is the federal Direct Consolidation Loan program.You can consolidate Direct Student Loans using one of several income-based repayment plans and there are loan forgiveness programs.

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However, it may end up costing you more money in the long run.

If you’re using private lenders for student loan consolidation, there is a chance you could get a better interest rate and possibly lower monthly payments. These are private loans where credit score and other conditions are weighed in. Here are some things to consider when evaluating the prospect of student loan consolidation.

If you have a tremendous job that pays really well and no dings on your credit report when you graduate, you could find a lender willing to give you a break on interest to get your business. There are two primary types of educational loans — private and federal.

Private student loans are credit-based, meaning student borrowers with high credit scores will pay lower interest rates than those with low scores because banks assess the risk of each borrower.

Learn more about federal student loans All students are eligible for federal loans, regardless of financial need.


  1. Jun 12, 2015. You might have a mix of both federal and private loans and have several different loan servicers. This can make keeping track of your total debt, minimum payments, and monthly due dates confusing. Sometimes it might even cause you to miss payments. In cases like this, consolidating your student loans.

  2. Consolidating your federal student loans can lower your payments but might affect your interest rate or benefits. some Direct Consolidation Loan repayment plans, the total amount of your education loan debt—including any private education loans—determines how long you have to repay your Direct Consolidation Loan.

  3. Borrowers who want to consolidate their federal student loans. Note There is no application fee to complete a Direct Consolidation Loan application. You may be contacted by private companies that offer to help you consolidate your loans, for a fee. These companies have no affiliation with the U. S. Department of Education.

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