How Student Loan Consolidation Works

If you’ve finished your schooling and you’re paying on several student loans, you may want to consider student loan consolidation. Student Loan consolidation will not only lower the payments, if you find your finances strained, you may save yourself a headache in the future. And, with the interest rates on the rise, student loan consolidation now will lock your consolidated loan in at the lower rates, which may not be available later.

A student loan is a lifetime obligation until paid, and, just like any other debt, non-payment is reported to the credit agencies. A student loan will not be discharged, even in bankruptcy, except in a case of extreme hardship, but extreme hardship is considered as having no money except for the bare necessities to live. So, before your finances get out of control, consider student loan consolidation now and lower your monthly payments with a guaranteed low interest rate.

As a general rule, private student loans cannot be included in with a government student loan consolidation. In some cases, however, the loan institution may allow you to include a private student loan, but it is not advisable to include a private student loan in with your government student loan consolidation. When a private loan is included with a federally funded loan, it then becomes subject to the same rules and restrictions as the federally funded loan.

If you are not considering student loan consolidation but are having financial difficulties, in certain situations, a student loan may be subject to forbearance, where you pay only the interest on the loan for a period of time, generally no longer than thirty-six months. This may give you enough time to get your financial situation resolved. However, if you are considering consolidation of your student loans, gather the information you need and act quickly before the end of your grace period. After the grace period expires, it’s almost impossible to consolidate your loans.

If you feel student loan consolidation is right for you, act now and lower your payments while locking in lower interest rates.


By Tony Lorenzo



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