Consolidate Federal Student Loan

Home mortgages aren't the only loans with record low rates. Because of recent declines in rates for federal student loans, many post-graduated students are choosing to consolidate their loans, and enjoy lower payments. Although college and graduate students spend an estimated four to eight years in school, landing a high paying job immediately following graduation may not be the reality. With this said, many graduates seek ways to lower their overall costs. Consolidating a federal student loan is one such way.

What is a Student Loan Consolidation?

Student loan consolidations involve obtaining a single loan which combines all previous federal student loans. Federal student loan consolidation can be compared to a mortgage refinancing. Graduates who apply for a student loan consolidation will obtain a new loan, which replaces the old. Typically, a student loan consolidation loan has a fixed interest rate and term. The average term is approximately 10 to 30 years; however, student may select a shorter loan length.

Student Loan Repayment Terms

The terms for repaying a federal student loan consolidation will vary according to the loan amount. On average, student loans under $7500 have a repayment term of 10 years. Moreover, students who owe between $7500 and $10,000 have a 12 year loan term. Loan amounts ranging from $10,000 to $20,000 have an average repayment of 15 years. Loans that exceed this amount generally have a 20 to 30 year repayment term.

Are all Student Loans Eligible for Consolidation?

No. Unfortunately, non-federal student loans are not eligible for a federal student loan consolidation. Non-federal loans generally consist of loans received from banks, credit unions, or private lenders. Moreover, college tuition paid with a credit card cannot be included with the federal consolidation.

Is Consolidation Right for You?