Federal Student Loan Consolidation

Consolidating student loans is often beneficial for college graduates. There are special consolidation programs available for most federal loans. While there are many rules and restrictions associated with these programs, they're much more affordable than traditional consolidation loans.

Consider Alternative Options

The first step is deciding whether or not consolidation is the best choice. Consolidation lowers the monthly amount of loan payments significantly. Before signing any papers, it's important to know that consolidation extends the life of the loan to 30 years. In addition to this, the interest rates will raise. Consolidation may be the best option for graduates who are struggling financially. Locate the customer service number on each separate loan's statement, call a representative, and ask about deferment and forebearance. If these options aren't feasible, it's time to consider federal consolidation loans.

Determine Qualification

If current loans are Direct, Direct PLUS or FFEL, they qualify for federal consolidation programs. Private loans don't fit into the qualification criteria. Students who are currently enrolled in an academic program and receiving financial aid may not apply. Whether graduates are still in the grace period or in repayment status, they may apply for a federal student loan consolidation program.

Understand The Federal Programs

Learning everything about federal student loan consolidation options isn't something that takes a mere hour or two. It's important to carefully comb through the information and absorb it. The best way to learn the answers to common questions or concerns is to read the FAQs on the Direct Consolidation Loans site.

Gather Information

Collect the account statements for all federal student loans. The most essential information is who is servicing the loan, how much the balance is and the account number. Be sure to have annual statements, quarterly interest statements and coupon books available. After collecting this information, obtain a PIN from the Department of Education. Many graduates already have a PIN, which is the security number a student chooses to associate with their online FAFSA application. It's possible to request a PIN reset if the number is forgotten. Simply visit the Department of Education's PIN Web site.

Complete An Application

After a PIN is obtained, navigate to the Federal Direct Consolidation Loans site. Start the application process. While it may seem daunting, the three main steps are fairly simple. Be sure to select a payment plan in Section D that will be easy to afford in the future. After completing the application, sign the Promissory Note by using the chosen PIN.

Consolidation may be the best option for graduates who are struggling financially

by Jess Smith, Education writer