The numerous types of student loans are commonly organized into two categories: federal student loans and private loans. Over $60 billion a year is disbursed through federal loans, military compensations, work-study programs, and grants. Federal student loans issued through the U.S. Department of Education are usually simple to consolidate.


Private loans are granted through lending institutions, such as signature loans through Citibank or Sallie Mae. Private loans are often unsecured and have higher interest rates than do federal student loans. Additionally, private loans often begin to accrue interest while students are still in school, but federal loans often do not begin to accrue interest until after graduation.

Students can use federal and private loans along with scholarships and other types of financial aid to fund higher education, but when students want to consolidate their debt, students must consolidate federal and private loads separately. Students should consolidate federal loans first and then private loans. Consolidating loans can lower interest rates and increase repayment terms (the amount of time required to pay off the loan). Student loan consolidation can also eliminate the need to make multiple payments each month on different loans.

Almost half of recent college graduates have accumulated student debt. The average amount of student debt is around $10,000. Interest rates that used to be between 6%–8% have recently fallen to between 3%–4%.

What Are Some Options for Student Loan Consolidation?

Students with loans have several options for student loan consolidation to reduce their debt. Lower interest rates mean that students can consolidate or refinance their loans at a lower cost. However, students should research and compare interest rates before deciding to consolidate their loans.

Taking out excessive amounts of student loans or defaulting on loans reflects poorly on students’ credit scores, which may latter impact students’ abilities to purchase houses, cars, etc. Taking out more than 8% of their incomes in loans can affect students’ abilities to receive loans in the future.

If you are interested in learning how to consolidate student loans, you are not alone! Just remember, there are many ways students can reduce their debt. For example, students can check into debt forgiveness plans offered by their fields, specialties, and careers. Debt forgiveness plans often include services or continued commitments. Reducing monthly

payments can also alleviate the burden of student debt by making each payment more manageable. However, students should be aware that adjusting repayment terms can impact their interest rates.


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