Federal Student Loan Consolidation Programs

Federal student loan consolidation programs are available for individuals with student loans who want to consolidate them into one lump debt. Not only does the program wrap all loans into one bundle with a single payment, there are also other advantages. Federal student loan consolidation programs allow the borrower to secure a fixed interest rate which will adhere to the life of the loan, and can never exceed 8.25 percent.

By using the federal student loan consolidation program, individuals will save themselves money by fixing their interest rate. Even if a student loan is in default, as long as there isn't a judgment against it or garnishment, the amount will most likely still qualify for consolidating. If the borrowed amount is in its grace period, or deferment or forbearance period, the borrower is eligible to utilize the federal student loan consolidation programs. However, using them could be a hindrance.

Depending on how badly the need to lower payments, using the federal student loan consolidation program could have the disadvantage of increasing the total interest payments because of the longer time period to pay the amount off. Sometimes it's important to do what is necessary in order to lower payments, though. Life can be difficult but choosing "rather to suffer affliction with the people of God, than to enjoy the pleasures of sin for a season" (Hebrews 11:25) is the better choice. In other words, it's better to have to pay more, and be able to make payments, than getting in a bind and not paying back loans. Consolidating can help borrowers do that.

Some may feel that the federal student loan consolidation program sounds complicated, but it's not as difficult to understand as it may seem. The payment plans can be figured by taking the weighted average of the interest rates on all amounts to be consolidated, and rounding that to the nearest one-eighth of one percent. To figure the weighted average of the interest rate to each lender, simply take each loan and multiply it by its interest rate. Next add the weight numbers together and then add the amounts together. Lastly, divide the weight total by the total amount and multiply by 100. 

There are many online calculators which will figure the estimated weighted average interest rates so that borrowers will have an idea of what payments would be. Using a federal student loan consolidation program makes it easier for the borrower to keep up with one debt instead of several from several different lenders. It also helps to have the interest rate locked. Both students and parents are eligible to consolidate and should take the time to seriously consider it.