Student loan debt consolidation is a way for a student to combine all of his loan debts into one loan with one monthly payment. There are two types of student loans: loans from the government and loans from private lenders. Federal student loans are given out by the US Department of Education and the Department of Health and Human Services. Non-federal organisations and other private lenders handle private student loans.
Student loan debt includes all of the costs a student has to pay for school in order to finish his studies. Most college students leave with a lot of debt. In student loan debt consolidation, the US Department of Education or other private and non-federal organisations pay off the existing loan, depending on the type of loan. One monthly payment is spread out over a certain amount of time for a new loan. But the rules for federal student loans and private student loans are different when it comes to consolidation.
Consolidating federal student loans can cut the monthly payment by up to 60%. Other benefits of federal student loan debt consolidation include low fixed interest rates and keeping subsidy benefits. The interest rate on a federal student loan consolidation is the average of all the interest rates on the loans that have been combined. When private student loans are consolidated, the interest rates are set by the lender. Also, private student loans and federal student loans are not combined.
In the past few years, consolidating student loan debt has become very popular because it saves people from having to pay off several different bills every month. Today, there are a number of services and centres that help people consolidate their student loans. Banks that take part in the Federal Family Education Loan (FFEL) programme are also available to help with this. On the Internet, you can also get help with consolidating your student loan debt.
