Consolidating Federal Loans Into Private Loans

Student loan consolidation takes all your federal student loans and creates one new loan, with a simpler repayment plan. Borrowers with federal student loans can apply for a Direct Consolidation loan. Borrowers with private loans also have options to consolidate through their loan servicer or a competitor. However, Federal and private loans cannot be combined into one loan together.

Interest rates are quite low for borrowers with federal loans. So consolidating federal loans into private loans isn’t really an option. That’s why the government offers the Direct Consolidation loan.

Watch this video to get an overview of consolidation.

Next Steps for Consolidating Student Loans

The next step for the consolidation process is diving into your specific loan information. Understanding student loan debt consolidation means understanding the loans you currently have. Getting all the details, terms and specifications for each of your loans is imperative to making the decision to consolidate or not.

Make sure you know all of the following information about your student education loans. Each of these items can make your loans a better or worse candidate for consolidation:

• Private, federal or a mix of both
• Repayment start date
• One loan payment or multiple
• Career field
• Income expectations
• Interest rates

Finally, your college’s financial aid office, some of your peers, the Department of Education, or ACCC can offer more advice on your unique financial situation. Use as many reputable resources as you can to get a game plan for debt repayment.

For more information on student loan debt, visit American Consumer Credit Counseling’s Student Loan resource center.