For students, graduates and professionals struggling to pay their student loan bills each month, student loan consolidation can be a godsend. By consolidating their existing multiple loans into a single loan, borrowers can significantly lower their monthly loan payments. This is because consolidation loan can have repayment periods of 10, 20 or even 30 years.

Consolidation is not for everyone. Some borrowers realize that by extending their repayment period by 10 or more years, they are at the same time increasing the total cost of the loan.

The Need For Student Loan Consolidation

The need for student loan consolidation is on the rise. Many graduates find themselves out of work, with their grace period ending fast or long-since over. Others are successfully employed, but they find that life’s other demands put such a burden on their monthly expenses that making their student loan payments has become difficult and they can use whatever help they can get.

A Student Loan Consolidation Comparison: Federal Vs. Private

For those considering student loan consolidation, the first decision to make is whether to go the federal or private consolidation route. The choice is fairly straightforward: the borrower should choose a federal consolidation loan if their current loans are federal loans, such as Federal Perkins Loans, HEAL Loans, FFELP or Direct Loans.

Meanwhile, the borrower should consolidate via a private consolidation company if their existing loans are private loans.

Both types of consolidation paths have their advantages. Borrowers can qualify for federal loans without a credit check, and the fixed loan rate is guaranteed for the life of the loan. Meanwhile, private loans offer the borrower more options in terms of fixed vs. variable rate.

At the same time, both have their disadvantages, as well. Federal loan consolidation offers fewer options in terms of interest rates, while private loan consolidation usually requires that the borrower pay an origination fee of up to 8%.

Comparing Private Consolidation Lenders

If you go with private loan consolidation, be sure to find, research and compare multiple lenders. You will find that loan terms and offers vary greatly from one to the next.