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Consolidating a College Loan

Receiving a college education may be the single most important accomplishment that one may achieve in their entire life time.

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Many college graduates don’t know how they can benefit by consolidating a college loan. Private lending companies, as well as the federal government, offer plans for consolidating a college loan. These types of loans provide borrowers with the simplicity of only paying one lender and one monthly bill, a reduction in payment size and an increase in the repayment period.

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Find out how to consolidate a college loan today.

Consolidating a college loan is possible with these U.S. Department of Education programs:

• The direct loan program- the borrowed money goes directly from the U.S. Department of Education to the student or borrower’s bank account
• FFEL program- governmentally subsidized loans are offered through private lending companies such as banks and Sallie Mae.
• Stafford program- these loans, offered to students, are a mix of both direct and FFEL programs.
• PLUS program- these loans, available to parents with children in college, are also a mix of direct and FFEL programs.
• Graduate/Professional PLUS program- the latest loan program which caters to graduate and professional students.

Graduating classes have approximately five more months of financial freedom. Soon, students will begin receiving their first round of college loan bills. According to the National Center for Education Statistics, two thirds of college graduates leave school with an average of $19,000 in total debt. These charges will come in from multiple lenders in both the public and private sector, at various times and for various amounts. Many of these students, swamped and overwhelmed by all of the stresses of the “real world,” will fail to realize the amount of time and energy they could save by consolidating a student loan.

The biggest perk of consolidating a student loan through the federal government is the lower, fixed interest rate. The rate is usually calculated by averaging the interest rates of all of the borrower’s loans together. It is then paid, along with the principal, for a term of up to 30 years. This gives borrowers more freedom to make larger payments, as they are able, throughout the life of the loan. Several types of governmentally funded loans can be consolidated into one easy payment.

While consolidating a student loan through the federal government is often a wise choice for many students. Private lending companies also offer deals on loan consolidation. Private student loans, such as the “Signature Student” loan from Sallie Mae, generally cannot be consolidated with federal loans.

According to, most private education loans don’t have price competition. This is because a private consolidated loan just replaces and combines several private loans. The major benefits of a private consolidated loan are shared with federal consolidated loans. They may lower your interest rate and monthly payments, based on your credit history score. They can also extend the life of your loan or loans.

The major difference between federal and private consolidated loans is that with private loans, the borrower may still pay a variable interest rate. states that this rate is found in a manner similar to that of home equity loan interest rates. Some lending companies even allow borrowers to use a fixed rate home equity loan to pay off college bills.

Whether borrowers consolidate their federal loans, private loans or both, they should be aware of the potential losses and benefits of the decision. Once a federal loan is consolidated, the interest rate is “locked-in.” Also, consolidation loans cannot be broken apart after the conclusion to consolidate has been made.

However, many students and families find that the savings in time, energy and money make a consolidated loan, both federal and private, a wise choice.

Are you interested in consolidating a college loan?
Find out how to consolidate a college loan today.