How Does Student Loan Consolidation Work?

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If you’re a college student or recent graduate, then you’ve probably thought more about student loans and how to pay them off than you’d like. With so much information out there, it may be difficult to figure out your best course of action. For example, many graduates have asked us how student loan consolidation works. While consolidating student loans is not the right choice for everyone, it can be a real help to some.

That’s why we decided to use this blog post to explain exactly what student loan consolidation is and whether or not it’s the right thing for you.

What Does Consolidation Mean for Student Loans?

Let’s start with the basics… How does student loan consolidation differ from the other types of debt consolidation? By definition, consolidation means combining many loans into one single loan. After consolidating, you have only one interest rate and make only one monthly payment, instead of having multiple rates and payments. Simplifying your life is a side benefit of consolidation – the main reason people do it is to get a fixed lower interest rate so they can pay their debt down faster.

The same is true for student loan debt consolidation, except that federal student loans cannot usually be consolidated with other debts. Private student loans can be consolidated with other debt in some case – for example by rolling them into a home equity loan