Inside the College Debt Consolidation Loan Process

After graduation, a college consolidation debt loan can help you overcome looming debt from student loans. The oftentimes daunting task of repaying student loans can be scary as a recent graduate, especially if your career is not yet solidly set. 

Why Consolidate?

The goal of a college consolidation debt loan is to turn your various student loan payments into one monthly payment, thus simplifying your finances and debt.  Typically when you consolidate loans of any kind, you take on one overall interest rate for all of your loans which usually will save you money in the long run.  Because different student loans often have similar interest rates you might not actually affect your interest rates in a significant way, but at the least a college consolidation debt loan will organize your finances and help you clearly see the end of the tunnel of student debt.  Different loans have different schedules for repayment and minimum monthly payments; by consolidating you will probably be able to lower the minimum payment and make the repayment schedule more comfortable for your post-college finances.

Consolidating Federal Student Loans

The US government runs programs designed to help you consolidate any federal loans you took out to help you pay for your education.  The federal Higher Education Act (HEA) provides for consolidation of loans through the Federal Family Education Loan (FFEL) Programs and the Direct Loan Program.  Through these programs you can consolidate different types of loans that are federally sponsored loans that may have different terms or repayment schedules and possibly lower the interest rate.  In order to apply for Federal loan consolidation you will need to go to the Federal loan consolidation website.  The application will ask about your personal finances, your spouses’ finances (if applicable) and other pertinent information in order to figure out the best configuration of loan consolidation for your lifestyle.

Consolidating Private Student Loans

When considering a college consolidation debt loan for private loans, the process can be somewhat trickier than consolidating private loans.  Private loans cannot be consolidated under Federal consolidation programs, but through a major loan lender or bank you may be able to consolidate your private loans into one single payment with appealing terms and lower monthly minimum payments.  When you are ready to begin your search for the most efficient way to consolidate your private student loans, the best place to start is with the bank that you use for your everyday banking needs.  Especially if this bank is nationally or regionally popular, they may be able to give you quotes on a college consolidation debt loan for your private loans.  It is important that you talk to several different banks and lenders before deciding how to consolidate your debt; interest rates, repayment terms, and minimum monthly payments are all key factors that can change from lender to lender.  Try to get the best consolidation package that you can.

When to Not Consolidate?

If you feel comfortable with the terms, interest rates, and repayment schedule of your student loans, consolidation may not be necessary.  It is important to remember that consolidation is not the eradication of your debt, it is merely the changing of the debt’s terms to make them more comfortable to the borrower.  Therefore, it is important to remember that even though you will be changing the parameters of your debt, you will still owe money and the goal of avoiding defaulting should stay as a major one as far as your finances are concerned.


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