Student Loan Consolidation: Another Financial Aid Option

Student Consolidation Loans are another way in which you can ease the burden of any money you decide to borrow to pay for college. Student Loan Consolidation combines several student or parent loans into one single loan from a single lender, which is used to pay off the balances on the other loans. You then owe the money that was used to pay off those balances to the single lender. This process is similar to refinancing a mortgage.

By consolidating student loans, one can significantly lower their monthly payments (the repayment period is usually extended), and simplify their finances. Overall, student loan consolidation will probably make paying back a loan easier for you, although it is not always the best option for everyone. I will discuss in more detail the benefits and drawbacks of student loan consolidation in some of my upcoming posts.

Consolidation loans are available for most federal loans, including FFELP Loans (Stafford, PLUS, and SLS Loans), FISL, NSL, HEAL, Perkins, Health Professional Student Loans, Guaranteed Student Loans, and Direct Loans. Private student loan consolidation is also available for private student loans as well. Start with Federal Student loan Consolidation, and then consolidate your private student loans, if necessary.

Even if making your monthly student loan payments are not currently a problem, you should still at least consider consolidating your student loans; doing so will lower your monthly payments a considerable amount (they are spread out over a longer period of time), which can free up money for things such as student credit cards and personal loans (which will likely have a higher interest).

The interest on a student consolidation loan may also be tax-deductible. But I’ll stop on the benefits here and discuss them more in future posts.

In the next posts I’ll discuss basic details and benefits/drawbacks on consolidating a student loan, different types of student consolidation loans that are available, and the specific benefits/drawbacks of each one.