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Government Student Loans Consolidation

Many students rely on government student loans in order to help finance their education.  However, once the cap and gown has been taken off and put away many are at a loss as to how to repay this debt.  Government student loans consolidation may be the answer to this problem.

There is a lot of information available on student loans, including government student loans consolidation.  Student loans can be consolidated by nearly ever lender, but interest rates on these loans have been gradually creeping up.  So it is better to consolidate now, if you plan to, rather than wait until it becomes an issue for you.

It is also important to understand that the government lays down the rules for government student loans consolidation programs.  Some of the rules include that interest rates are fixed across the board, certain loans, such as Stafford, Perkins, Nursing, and Health Education Assistance, can only be consolidated after graduated, and loans must be fully disbursed to be consolidated.  Since July of 2006 a few new rules have been added as well:  married borrowers cannot combine their loans for consolidation and students who are in school cannot qualify for consolidation.

Because of this, it is important to evaluate your personal debt situation before applying for government student loans consolidation.  If you have a high amount of debt, you may find that consolidation is your best option.  However, if your debt is small and you think that you will be able to pay it off pretty quickly, it may be easier and cheaper in the long run to leave things at the status quo.  Take the time to read the fine print to make sure that the government student loans consolidation is something that you understand and can keep up with.  Failure to make your payments on time will have an adverse reaction to your credit rating, and make it more difficult for you to get good loan rates later on.

Before you go through all the hassle of applying, you will need to know if you are eligible for government student loan consolidation.  If you have more than one federal student loan, you must be in good standing with their loan, and be on the loan grace period or have made three full monthly payments on time for each loan.  Both subsidized and unsubsidized student loans can be consolidated, however, they must be done separately so that lenders can monitor them as required by law.  The payments for these can be combined, though, so that the student only has one payment per month.

The important thing to remember is that with a government student loans consolidation the debt still must be repaid.  However, the payment time is often extended longer than the original loan so that the student has smaller monthly payments.  While this is useful now, it does mean that they will end up paying more in the long run for the loan when interest rates are calculated in.  Often, you will only benefit from consolidation if you have large outstanding loan amounts – smaller ones can be repaid faster and easier on your own.

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