Loan consolidation eliminates multiple monthly payments

Consolidating your federal student loans can simplify your finances greatly. Student loan consolidation of your federal loans means that you don't have the burden of making multiple monthly payments on different loans. Instead, when you consolidate you reduce your monthly multiple federal student loan payments down to one.

Federal student loan consolidation eligibility

You can consolidate all of your federal student loans into one easy payment; however, if you have any outstanding private student loans, you won't be able to consolidate them with the federal loans. For private loans you will need to apply for a private consolidation student loan. Anyone with multiple federal student loans can consolidate them. Even parents who have taken out loans for their children can consolidate; however, both parents and the student cannot consolidate separate loans. Only loans from the same borrower can be consolidated.

Interest rate on consolidated federal loans

The interest rate on federal student loan consolidation is the average rate of all the loans being consolidated and rounded to the nearest 1/8 of a percent. By law, the rate cannot exceed 8.25%. This is good news for students with variable interest rates because they will never have to worry about rising interest rates making it difficult for them to make their loan payment each month.

Flexible repayment schedules for consolidated federal loans

The repayment plans for student loan consolidation are similar to other federal loans. There is the standard 10-year repayment plan, as well as the extended, graduated, and income contingent plans. Make sure and specify which one you want or you'll automatically fall under the 10-year repayment plan. However, the length of these plans usually caps out at 25 years under normal circumstances, but when you consolidate your federal student loans the repayment length can be extended to 30 years to keep the monthly payment low if you have an extremely large loan.

Consolidation can reduce monthly payments

Consolidation is a great avenue to explore when you have multiple federal student loans. The amount of interest you pay over the course of repayment won't change significantly, but the lower monthly payments will make it so that you're not living paycheck to paycheck. If you have multiple federal student loans and have not consolidated them then do so immediately. It can help fatten your bottom line every month.