Federal Student Loan Consolidation

Posted by Naomi Rockler-Gladen Mar 2, 2007

Is government student loan consolidation right for you?

Federal student loan consolidation is a simple idea: it just means combining your student loans into one. As a result, you'll only have one monthly student loan payment, and you are likely to have lower student loan interest payments

If you're thinking about consolidating your federal student loans, here's some information about the pros and cons of government student loan consolidation. And here are a few helpful questions to ask yourself before you consolidate your federal student loans:

1. Will the interest rate on my consolidated loan be cheaper than the interest on my current loans?
2. If I extend my loan so I can have lower monthly payments, how much money in interest will this cost me in the long run?
3. What percentage of your loans are outstanding? If they're close to being paid off, it might not be worth it to consolidate.
4. Will consolidating my loans cause me to forfeit the benefits of some of my loans, such as the Perkins loan?
5. Will you be impacted negatively by the fact that consolidated loans accumulate interest while you are in graduate school, even though these loans are deferred?

Federal student loan consolidation often is very helpful for college graduates. However, it's not the solution for everyone, so do your math and weigh your options carefully.