student debt consolidationStudent debt consolidation loans essentially mean that you combine all your existing student loans into one single loan. For this purpose, you need to hand over all your existing student loans to one lender who will pay off all the individual loans and you must in turn repay the total amount to them.

The major advantages of consolidating student loans are:

  • Only one EMI check to be signed every month
  • A lower monthly EMI to be paid
  • A longer duration to repay the total debt
  • Gain better credit scores by not defaulting on your monthly EMI payments since the amount to be paid per month is lowered and you can easily pay them off

You can choose to consolidate private student loans as well as federal student loans. However, you should not consolidate private student loans and federal student loans together.

The method to consolidate private student loans and federal student loans is almost similar:

For both of these, you will have to submit an application for private student loan consolidation or federal student loan consolidation as the case may apply. The application for consolidation may be submitted to either your current loan provider or to some other lender. On submission of your completed application and your loan information, the lender will verify the information provided by you. On confirming the correctness of the details, the student loan consolidation lender will send out checks to all other individual loan lenders.

The difference here is that:

  • Federal loans are generally at a much lower interest rate than private loans and hence your consolidated loan interest is likely to be less.
  • Federal loans can be differed in case of hardships
  • There is no need of a co-signer
  • There is no processing fee for consolidating federal student loans

Whereas, when you opt to consolidate private student loans,

  • The interest rates are likely to be high, since they are based on your credit scores
  • You might be required to get a co-signer in case your credit scores are not good
  • You should try to research and find out the best lender in order to ensure you do not spend too much by paying for interest

However, considering the benefits of consolidating student loans, it is a good option to consolidate private student loans as well as federal student loans. It will reduce a lot of headache for you and help to keep your mind focused on your education and future profession.