Student Loan Consolidation

Student loan repayment is a serious worry and burden for a recent graduate, especially in times of high unemployment like today.  However, education loan refi can lessen the burden.  Students may consolidate loans from both the Federal Family Education Loan Program (FFELP) and the Federal Direct Student Loan Program (FDLP), referred to as direct loans.  

Direct Loan Consolidation Process

A student may consolidate Stafford Loans, PLUS Loans, and Federal Perkins Loans into one single loan, which helps to reduce monthly repayments by creating a fixed, weighted average of the interest rates among all of the student’s loans and a longer term for the loan (from 10-30 years).  However, though direct loans that have been refinanced and consolidated have longer terms than other loans and monthly payments that are lower, the total amount paid over the term of the loan is higher than if there had been no education loan refi. 

It should be noted that some features of the original student loan repayment plan are altered when the loans are consolidated through a student loan refinance program.  For example, post-graduation grace periods and special forgiveness circumstances disappear from the loans. Also, the Great Recession and turmoil in the financial and credit markets has led to the suspension of many loan consolidation programs, including Sallie Mae, Nelnet and Next Student.  An individual, however, may still consolidate his direct loans through the government.

Getting Financial Help

Student loan repayment is a huge cost for the average person and it is integral that an individual contact a qualified professional with any questions that he or she may have about student loan refinance.  A qualified professional should be contacted whenever a person seeks financial help and has a financial query.