As the value of higher education rises, so does the price. The only way that many students can afford higher education is through student loans. Having multiple student loans can mean high monthly payments and interest rates, but federal student loan consolidation can reduce monthly payments and lower interest rates.
Federal student loan consolidation is available for any students who have federal student loans. To qualify for federal student loan consolidation, students must meet only a few criteria. Students must have multiple federal student loans and either must be still in the post-graduate grace period or must have successfully made three monthly payments on their loans.
Though subsidized and unsubsidized loans may be consolidated, they are consolidated into two separate loans. This allows them to be monitored separately by lenders, but the payments are still combined so that students only make one larger monthly payment that goes toward both your subsidized and unsubsidized loans.
Consolidating federal student loans does not forgive the debt; however, it does allow for longer repayment terms and lower monthly payments. These repayment terms vary from 10 to 30 years depending on the amount of debt. The monthly repayment amount of consolidated federal student loans is dependent on the repayment term, amount of debt, and interest rates.
Consolidating federal student loans prolongs repayment terms to reduce monthly payments but also accumulates more interest in the long run. Therefore, make sure you take the time to consider your current personal financial situation before you decide whether to consolidate. If you are simply going through a rough patch that you know is temporary, it may be a better decision not to consolidate to avoid more long term interest.