Debt Consolidation on Student Loans

Essential Information On Student Debt Consolidation
By Mary Wise

Consolidating Federal Student Loans

Federal student debt consolidation is usually done through another federal student loan. This new loan combines the outstanding loans into a single loan and locks the interest rate. The benefits you can obtain by means of this type of consolidation are significant as all these loans are subsidized which implies low rates. If the rate is locked, this implies that you will have the same monthly installments for the rest of the repayment program while your income may improve.

Private Student Debt Consolidation

Private student debt consolidation is also done through a debt consolidation loan. However, this new loan will be a private loan. Though most of these loans are also subsidized, the interest rate charged may be higher than that of federal loans for students.

As to the requirements for approval, provided that you are up to date with the payments there won’t be a problem with approval as you are already showing that you can repay debt with higher monthly payments. However, if you have defaulted on a loan or have late or missed payments, you’ll have more difficulties during the qualification process.

Consolidating PLUS Loans

PLUS loans are awarded to parents and thus, these loans need to be consolidated separately from the loans awarded to students.

However, it is possible to consolidate them jointly if both co-sign the same consolidation loan.

However, this is not a common solution as the nature of the debts is different too and thus it is not always advisable to consolidate both debts simultaneously.
Nevertheless, it can be done and sometimes, either the parents or the graduated student, choose to consolidate through a home equity loan and unify all student debt and consumer debt into a single loan.

Joint Consolidation of Federal Loans And Private Student Loans

This is a particularly complicated issue. Private student loans can not be included in federal consolidation loans due to obvious reasons.

However, federal student loans can be included in private consolidation without difficulties.

However, is it advisable to do so? Generally, No. This is due to the fact that federal loans are subsidized loans and carry low interest rates while only some private student loans are subsidized and even those which are still charge a higher rate than federal loans. Thus, by consolidating, you would be turning an otherwise cheap debt into a more expensive one.

Higher Debt, Lower Payments

Of course, if what you need is to bring some ease to your financial life and would benefit from lower payments, private student debt consolidation offers better chances of getting longer repayment programs and thus, lower installments so your debt becomes more affordable.

Mary Wise, a professional consultant at Badcreditloanservices.com with twenty years in the financial field, prevents consumers from falling into the hands of fraudulent lenders.
In her website you will find more useful tips and interesting financial articles on this and many other related topics.

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