Loans Just For Students- Federal Consolidation Loans

There are many types of loans out there, and there is one that is just for students. These loans are federal consolidation loans.

Aside from consolidation loans offered by private companies, there are also loans offered to debtors with multiple loans by the United States Federal Government.

The federal consolidation loans that are the easiest to obtain are those loan programs for students, which makes a lot of sense. After all, students and recently graduated students are the ones that need a lot of help when it comes to finances. With little or no source of income, they actually have to pay the whole gamut of student loans, medical bills and credit card debts. The U.S. Department of Education thankfully has loan programs in place that consolidate all federal education loans and allows students to pay for these loans through a single monthly payment.

If you are a student or recent graduate with multiple education loans, the Higher Education Act grants you the right to consolidate your loans. This act created a group of federal consolidation loans under the FFEL, or Federal Family Education Loan program and the Direct Loan Program.

Of course, under the federal consolidation loan programs, only the federal loans can qualify for consolidation. To obtain a Direct Consolidation loan, you must already have at least one federal loan under the Direct Loan or FFEL program. The loan or loans, in addition, must be in any of these statuses: “grace period”, “in deferment” or “in default”.

Federal Student Aid from the United States Department of Education can give you much more detail to help you consolidate your debt. Besides FFEL loans, there is another type of loan. This is the CBSL loan. Between the two types, there are a number of loan programs, including Federal Direct Loans, Federal Parent PLUS Loans, Federal Direct Grad PLUS Loans, Supplemental Loans for Students(SLS), and Federal Subsidized and Unsubsidized Stafford Loans, as well as Federal Perkins Loans, Health Professions Student Loans, Federal Nursing Loans, and Federally Insured Student Loans.

FFEL loans and CBSL loans cannot be co-mingled, and you need to consolidate the different types of loans under FFEL-type or CSBL-type of consolidation loans. In any case, federal consolidation loans can greatly reduce your monthly payments into one, and reduce the payment amount up to 40%. Term payments too can be extended up to 30 years.

There are private student loans and federal student loans. If you have a mix of both, it would be wise to prioritize the federal loans. This is because loans that were granted by the United States Department of Education can have lingering effects on your finances, even beyond your graduation. The federal government can require your employers to deduct 15% of your gross salary to pay for a defaulted loan or loans. Your tax refunds can also go to the payment of your debt.

Having multiple federal student loans at the same time need not be a source of stress. The federal government, in offering consolidation loans, has actually provided you with a solution to this situation. Keep in mind, however, that as with all debts these consolidation loans must be paid.