Making the decision

Many recent college graduates wonder whether or not they should consolidate their loans into one monthly payment with a locked-in, lower interest rate. For those who have borrowed from several lending sources, and the amount you owe is laying a heavy financial burden on you each month, then you should consider federal loan consolidation. All existing loans will be paid off, and the amounts that you transfer for a new loan will likely have a better interest rate and a more reasonable payment plan.

Included loans available

When looking to choose the best consolidation loan for you, be aware that there are various options available. These include: subsidized and unsubsidized Stafford Loans, Perkins Loan, Supplemental Loan for Students, PLUS Loan, Federal Insured Student Loan, and the Health Professions Student Loan. Once you've decided to go ahead and apply for a Federal Loan Consolidation, you can do so through your personal financial institution, a commercial financial institution, or even through the federal government's U.S. Department of Education Direct Federal Loan Consolidation program.

What will happen

Once you've decided on a program, you can get started on the application process. When you've been approved, you can expect that your previous debts will have been paid off and rolled into one affordable payment each month. You can work with your lender to find the lowest possible interest rate and the payment plan that is right for you and your budget.

When you shouldn’t consolidate

Not everyone finds that a Federal Loan Consolidation is best for them because of its many disadvantages. Although you will have a lower interest rate, you will end up paying more interest since you've lengthened your payment period. You may not be able to use the loan cancellation features that you once had. You may also find that you lose any deferment privileges that your previous loans offered. If you don't agree to a fixed rate, you may find that your payments greatly increase and the years go by.

How do you decide?

For some, federal loan consolidation is the best way to pay off burdensome loans. While for others, it makes sense to stick with his or her original loans. As long as you do your homework and weigh your options carefully, you can ensure you make the financial decision that is right for you.