Federal student loan consolidation plans are often used by many college graduates to make their student loan debt repayment more affordable and easier to manage. Student loan consolidations are, like any other debt consolidation loan, simply a way in which various sources of debt can be rolled into one loan, with one interest rate, and one monthly payment.
This will obviously help many college graduates out to have various student loan debts and may be unable to pay these loans separately, or who may be stained in their finances to do so. Student loans consolidations, for federal loan debt, can be quite affordable and can make the burden of student loan debt easier to bear after college. For instance, the program that oversees federal student loans, Federal Direct Loans, has a direct Consolidation Loan with a fixed rate, which has helped many graduates make repaying their federal student loan debt more affordable. One benefit of this consolidation is that, according to the Direct Loan website, a student loan interest rate cannot exceed 8.25%.
However, the Direct Consolidation Loan program often advises college graduates who are considering a consolidation to review their personal financial situation and consolidation options to make sure a student loan consolidation is in their best interest. A consolidation loan for student loan debt can be helpful, but it will not be beneficial for every college graduate.
For instance, certain types of student loans will not consolidate, and even federal student loans like unsubsidized and subsidized loans typically cannot be consolidated into one plan. It’s for this reason, again, college graduate with student loan debt must look at their student loan situation to make sure consolidation is right for them.
Also, depending upon the number of loans one has, consolidating may cost more over the long run due to the fact that a higher principle amount will be attached to an interest rate. Even if a student loan consolidation interest rate is quite low, a larger principle will take longer to pay off and interest can cost more over time than if a graduate had simply paid their student loan debt separately. However, again, this will be dependent upon the graduate’s student loan situation.
Anyone who is considering a federal student loan consolidation can consult with the Direct Loans program or contact their lender to talk over options. While student loan debt is something that must be dealt with for many college graduates, it does not have to be overly burdensome for years after graduation.