It is common for students who have taken out federal or private student loans to pay for their college education expenses to look at consolidating those loans into one.. Consolidating a student loan makes handling the debt easier because instead of several separate loans there is only one loan to deal with and the single payment each month will be lower than the payments of all the individual loans.

As for private student loans, if you do manage to obtain a loan consolidation you are simply trading one or more private loans for another one.. You cannot just assume that you will be able to get a loan consolidation if you have several private student loans.. The private loan lender has no responsibility to do a consolidation, and the lender may simply deny the request or state that they are not doing loan consolidations due to tight credit markets, for example. And if you do manage to get a private student loan consolidation pay particular attention to the rate of interest you must pay on the consolidated loan. Lenders have been known to charge significantly higher interest charges on consolidated private student loans than the borrower was paying before. Also, it is not feasible to consolidate private and federal student loans together. It would be wise to avoid private student loans if possible.

Federal higher education loans are always better for the borrower than private college loans. Any time there is a student consolidation of federal student loans there is a cap on the interest that may be charged, and it is determined by the weighted average on the interest rates for the separate federal loans being consolidated. The borrower also has other rights with federal student loans such as the right to deferment in certain circumstances and also the right to forbearance. Furthermore the student borrower has the option to alter the pay back program to one that is determined by current salary. Therefore lower more affordable monthly payments can be obtained for people who come into difficult financial times. Naturally this means that it will take longer to pay down the school loan, and the total amount of interest to be paid out will be increased in the end as well. But the tradeoff will be worth the trouble if the lower payment schedule helps the borrower avoid loan default. It cannot be overemphasized that defaulting on school loans is the last thing an individual wants to have happen. There are big penalties and collection costs, not to mention accrued interest. Quite a few consumers who have defaulted on higher education loans are shocked to find out they currently owe 3 or even 4 times the sum of the initial loan.

Borrowers need to follow two guidelines when they consolidate student loans to avoid loan default and the issues that accompany it. No one should borrow more money than the expected starting salary for their profession. In addition, the month-to-month loan payments should not exceed 10% of gross pay. Having student debt beyond that is likely to make the borrower feel over extended. You can learn more at Student Debt Consolidation and Student Consolidation.

Borrowers should additionally be conscious that once a student consolidation of a federal education loan has been executed it can’t be refinanced at a subsequent time. Therefore the borrower is obligated to stay with the lender and the terms of the loan and interest rate cannot be changed later. And last but not least borrowers need to know that student loan debt cannot be gotten rid of by declaring bankruptcy.