Student Loan Debt Consolidation - An Overview

There are a number of student loans and can be categorized into two main types: Federal Student Loans and Private Student Loans. The Federal student loans are disbursed through the US Department of Education's Federal Student Aid programs, and are the easiest to obtain. The private student loans are obtained from standard lending institutions and banks, among others. You can use both types of loans to fund your education, but when it comes to your Student Loan Debt Consolidation, never mix up the two together.

Start by consolidating your Federal student loans first. The benefits of student loan debt consolidation of your Federal loans is that:

• The rate of interest is lower

• It reduces your monthly payments as the term of loan repayment is increased to 30 years, depending on the loan balance

• The repayment is consolidated to a single check payment each month.

You are eligible to go for your student loan debt consolidation of your Federal loans when you are not enrolled in school any longer; you are actively repaying your loan or are in your six-month post-graduate grace period; you have a minimum loan amount of $10,000.

The reason why you should never mix up the Federal and private loans during student loan debt consolidation is that the interest on Federal loans is tax deductible; you can defer payments when you go back to school; and the loan is forgiven for certain types of service. Private students loans do not have these advantages as they are treated just as normal loans. Mixing up the Federal and private loans during student loan debt consolidation makes you lose all the benefits of the Federal loans consolidation.

Go for student loan debt consolidation to lower your debt burden, as once you have graduated you have to start paying back your loans.


By Gibran Selman

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