How To Successfully Consolidate School Loans

To consolidate school loans means to merge your multiple loans under one debt. Loan consolidation provides you with a number of benefits like low-interest rates, low monthly installments, singular payment every month etc. In short, if you want to manage your school loan debt smartly, the best option for you is to consolidate them.

Before you choose to consolidate school loans, you need to develop an in-depth understanding of consolidation.

1- Consolidating Parties: Both school students and their parents can consolidate their borrowings, but separately.

2- Consolidating with Spouse: Married students also can not consolidate their loans together with their spouse, because each spouse becomes responsible for the full amount which could not be separated if the couple gets divorced.

3- Timing of consolidation: You can consolidate your loan during your grace period or when the loan enters the repayment mode. However, you can not consolidate school loans if you are still in school.

4- School students with default loans: Loans that are in default can be consolidated but should have a satisfactory repayment arrangement.

There are several programs which are categorized under two main headings: federal consolidation loans and private consolidation loans.

There are two major categories of federal loan consolidation: Federal Family Education Loan (FFEL) program and the Federal Direct Loan program.

Federal Family Education Loan program is the type of consolidation program which offers loan from private lenders but it is guaranteed by the guarantors and reinsured by the federal government. You can avail this types of federal consolidation loans;

* PLUS - These loans enable parents having good credit history to pay for their children’s educational expense.

Federal Direct Loans are available from the US Department of Education. Under direct loan program you can avail the following loans:

* Direct Subsidized Consolidation Loan combines federal student loans eligible for interest subsidies, such as subsidized FFELP and Direct Loans, and Federal Perkins Loans.

* Direct Unsubsidized Consolidation Loan combines federal student loans not eligible for interest subsidies. If any one of the loans to be consolidated is unsubsidized, then you will receive an Unsubsidized Direct Consolidation Loan.

* Direct PLUS Consolidation Loan combines FFELP PLUS and Direct PLUS loans.

Private consolidation loans are the ones that you can avail from private lenders for eg. If you ever plan to consolidate your federal and private loan always remember to consolidate them separately. The package contains details about discounts and interest rates.

Moreover, one can easily locate the student loan information by him or herself as these companies also have loan counselors to provide guidance step by step. By Sara Sentor