Consolidating student loans after college

18 Oct

In reality, though, not that many people end up being eligible.

Requirements vary depending on the type of loan, but most offer forgiveness for those employed in certain public-service occupations.

Student debt has reached an all-time high in the U. of late, with an estimated 40 million people now owing an average balance of ,000, according to credit report company Experian.

With student loans soaring, debt-saddled students and graduates are desperate for any strategy that may help them escape their burden.

That single consolidation payment may be lower than your previous payments combined if your repayment term is longer, and consolidation can also decrease your interest rate.

In general, you can consolidate your federal loans separately from your private loans. Department of Education serves as the lender for the Direct Consolidation Loans, with which you can consolidate existing Direct Loans, Federal Family Education Loans (made under the old FFEL program), PLUS Loans, and sometimes Perkins Loans.

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Only payments made after October 1, 2007, qualify towards earning eligibility, so borrowers won't reach the 120-payment milestone to qualify for forgiveness until 2017.

Under certain circumstances, federally backed student loans – such as Direct Subsidized Loans and Federal Perkins Loans – can be discharged or forgiven.

The prospect of your student debt evaporating may seem like a dream come true.

If you apply for a private consolidation loan together with a borrower who has good credit, it may be possible not only to win approval for that loan but also to lower your interest rate.

That result is not a given, but if your credit history has improved since you first borrowed, then you should try to leverage that improvement into a lower rate.