Many students that leave college with federal student loan debt think little of it until the grace period has expired and repayment must begin. However, there are options for dealing with federal student debt and one of the main ways of doing this is in the form of a student loan debt consolidation plan.
Student loan consolidation works like a debt consolidation loan, but they often come with a lower interest rate. Student debt consolidation loans roll all of your student debt into one place, making it easier to manage in many cases.
However, student loan consolidation isn’t for everyone as some people only have one or two forms of student loan debt, so consolidating these debts into one big loan may cause you to pay more over the long run on interest.
There are student loan forgiveness options which usually require a consolidation and enrollment in an income-based repayment plan, meaning those in a public service job can have their loans forgiven after 10 years of repayment and those in a non-public service job after 25 years.
While many feel student loan consolidations should only be used for those with a lot of federal student loan debt, it typically takes an examination of one’s personal student debt situation to find which option is best. Advisors typically say that if it looks like you would pay more by keeping loans separate then consolidation may be in order, but if a graduate has only a few loans it may be best to keep them apart.