Consolidating Federal Student Loans—What Are Your Options For Managing Student Debt?

College graduates will likely leave college with some form of student loans and typically one or more of those loans are federal student loans.  Federal student loans, thanks to legislation that has been passed by Congress, are going to change over the next few years in the hopes that costs will be lowered and repayment or forgiveness will come easier.

However, many with federal student loan debt are wondering what they can do now to manage their student debt and asking if student loan consolidation is right for them.  Taking a look at one’s personal financial situation and student debt situation is going to be the first step to answering these questions.

Students with multiple federal student loans, from various lenders, may be able to benefit from a student loan consolidation.  Typically, consolidating loans with the governmental lender Direct Loans is going to afford you the opportunity to better manage your debt and the option for student loan forgiveness after 25 years of repayment, which is set to possibly go lower in the future.

However, if you have different kinds of student loans or only a few, it may be better to pay them off separately.  While consolidating your student loans puts them into one group, even a low interest rate may cost more over the long run on a larger amount of debt.  In this instance a college graduate may not benefit from consolidating.

Yet, if you have a large amount of federal student loan debt you may benefit from consolidation, as you might also be able to get on an income-based repayment plan, which would make paying your loans easier and possibly afford you the option of student loan forgiveness down the road.