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Federal Student Loan Consolidation Made Easy

Written By adi mulias on Thursday, November 17, 2011 | 8:00 PM

Federal programs

There are two federal student loan consolidation programs in the usa that allow a student to consolidate all student loans into a single loan:
  1. The federal family education loan program
  2. Federal direct student loan program
the above two programs were established to deal with the following loan types:
  • Stafford loans
  • In addition loans
  • Perkins loans
The offer of fixed interest rate for the entire loan life cycle is one key characteristic of consolidation loans by authorities targeting at students.

A brief history of the government program

The federal student loan consolidation program was created in 1986 to allow graduates with several federal loan to consolidate them all into one solitary loan package. Such consolidated loans had a variable rate of interest from 1986 to 1998 but in 1998, the us congress acted to convert the variable rate to 1 of a fixed rate weighted average. The latter arrived to force on February 1, 1999. Before this time, a consolidated student loan from federal government used to possess a variable rate. That rate was determined by either the university or the lending company, whoever is the loan originator.

Interest implications

When compared with student loans provided by federal government, the term of payment for federal loan consolidation loans is longer. It can range anything from 10 to thirty years. Even though monthly repayments are reduce, the overall cost of the term of the loan is really higher than with other federal student loans.

Don't rush to decide

if you've existing loans that cost you considerable money, despair not really. Consolidating your loans may be the way to proceed. However, it is important to appreciate the fact that federal education loan consolidation is not always suitable for every borrower with federal education loan payment.
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