Government Student Loan Consolidation

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The price of higher education has continued to rise even as the importance of furthering one’s education has skyrocketed. As a result, more students and graduates are incurring student loans. For these individuals, government student loan consolidation offers one option which may reduce their burden in some circumstances.

Government Student Loan Consolidation: Who’s Eligible

All students with federal student loans are eligible for government student loan consolidation. However, some requirements must be met in advance. First, the student must have more than one federal student loan. If he or she only have one now, then consolidation is unnecessary. Second, students must be in good standing with their loans. That means the student must either still be in his or her six-month post-graduate grace period or have made three full monthly payments on time for each of the loans being consolidated.

Both subsidized and unsubsidized student loans can be consolidated. According to the Federal Consolidation Loan Information section of the Carnegie Mellon web site, however, those loans will be consolidated in two separate loans so that lenders can monitor them separately as they are required to do by law. Despite that, the payments for those loans will be combined so the student still only pays one payment per month.

Government Student Loan Consolidation: Repayment

Loans consolidated through government student loan consolidation must still be repaid. One of the advantages of consolidation, however, is that the repayment period is often extended so students have longer to pay off their loans. That means students will need to make lower monthly payments. Maximum repayment periods for consolidated loans vary from 10 to 30 years depending on how much is owed. The cost of the monthly payments depends on the repayment period, total loan amount, and interest rate.

Students should keep in mind that while a longer repayment period and lower monthly payments can be useful now they will end up paying more in the long run because of the additional accumulated interest.

To learn more about government student loan consolidation, read “Student Loan Consolidation Programs“, “Student Loan Consolidations,” or “A Primer on Loan Consolidation“.