Low Interest Student Loan Consolidation–Will Federal Student Loan Consolidation Save You Money?

College graduates often have acquired some form a student loan debt upon graduation from college or a university. Typically, federal student loans are what most college students borrow as they are easy to obtain and usually have a lower interest rate since they do not factor in a credit score or credit history. However, some people have multiple student loans when they exit school and often turn to a low interest student loan consolidation to help them deal with their debt.

Low interest student loan consolidations for federal student loan debt can be helpful and make repaying student loans easier. However, it’s going to be necessary for you to do the homework to make sure that a student loan consolidation is going to be in your best financial interest before you proceed. Many student loan consolidations will have low interest rates offered but even at the low rate consolidating may not be the best bet for some.

Someone who has a variety of student loan debt, specifically federal student loan debt, may be able to consolidate their loans into a low interest loan through Direct Loans, a program within the Department of Education that helps student borrowers with their federal debt. There are also debt assistance options like income-based repayment plans and student loan forgiveness programs, so repaying student loan debt shouldn’t be burdensome for anyone who has to borrow a loan to pay for school.

Yet, if you only have one or two forms of student loan debt or you have a variety of loan types that won’t consolidate, like institutional loans and federal loans or unsubsidized and subsidized loans, you may not benefit from consolidating. Even at a low interest rate a student loan consolidation can cost more over the repayment lifetime since there will be a higher principle amount attached to the interest rate.

Exploring your repayment options by keeping your debt separate verses consolidating is going to be the best way to figure out what financial path is right for you when it comes to repaying student loans. While it will be dependent upon your financial situation, keeping loans separate may be better as it could save you money over the life of your repayment. Make sure that you take time to look at what option is going to benefit you and contact your lender if you’re having trouble and may need assistance in dealing with your student loans.