Following are tips on how to consolidate student loans. You will also find information on how to consolidate private student loans, as well as federal student loan consolidation.

Consolidate Student Loans and Avoid Default

One has the ability to not go into default on student loans, by obtaining a loan consolidation.  In this way you will have only one loan to keep track of, and one monthly installment.

People need to understand that for federal loans you will not be considered in default until 270 days, or 9 months, have passed without any installments being paid. 

For private student loans this number will be less, and it will be determined by the agreement signed with your student loan company.

So if a borrower is approaching the 270 day time period, it is possible to avoid default by getting a loan consolidation.  One can understand a good deal more about the ramifications of student loan default here – default student loan consolidation.

If student loans can be consolidated depends a great deal on whether the loans are federal or private student debt.

For federal student loans, a borrower has the option to do a loan consolidation at least once, and the interest rate for the consolidated loan will be set by law. It will be the weighted average of the interest rates on the individual loans. 

This is not the case for private loans. For these the lender is under no obligation to execute a loan consolidation.  They can simply refuse to do so for any reason or no reason, and in that case the borrower is required to pay each private loan separately. 

I recently read an example of how this can work to the detriment of student loan borrowers.  A young person borrowed $75,000 in three private loans to pay for his college schooling .  He became a teacher and his salary started at $25,000.  (Note- he borrowed way too much – 3 times more than he should have.)  He applied for a consolidation of student loans and was refused .  His total monthly payments were $1,400 per month, practically as much as his take-home pay. 

There are considerably more differences between federal and private student loans.  Student borrowers would be well advised to steer clear of the latter.

Hopefully this has helped those of you who are students deeply in debt, or know students who are. As you just read, there are ways to consolidate student loans that will most likely work for you.