What student loans are available to go to college?

Consolidation Loans

Let's face the facts, going to college is expensive.  If you're looking for a little financial help, your best bet would be to apply for a grant (money that is given to you based on your need and doesn't have to be paid back).  To apply for financial assistance from the Federal Government, fill out the Free Application for Federal Student Aid (FAFSA).  You can learn all about how this works and fill out the form at www.fafsa.ed.gov.

If you've found that you don't qualify for grant money, your next best bet is through a scholarship.  Some schools offer full-ride scholarships, which means that they'll pay for every single academic expense you have for a number of years.  If you qualify for such a scholarship, chances are you've already been contacted by the school.  Other scholarships offer lesser amounts of money based on either outstanding performance in academics, sports, music, the arts, or based on gender or nationality.  Check out a huge database of free scholarship information at www.fastweb.com.

We're not here to talk about free money, though.  If you still need money for college after exhausting all of your other resources, and you know you won't be able to make up the difference by working a part-time job, then it's time to borrow some money in the form of a loan.  There are many different loans out there.  Individual banks, institutions and Universities will often have their own loans to offer. 

Chances are you've already found a few of these loans, like the Federal PLUS or Perkins loans.  If you're making numerous loan payments each month, all with different interest rates, it's time to consider a consolidation loan.

An Overview of the Consolidation Loan

While the consolidation loan is not technically a loan in and of itself, it is a combination of loans that you already have.  A consolidation loan combines all your monthly payments into just one and will normally adjust all your varying interest rates to be the same.  A consolidation loan also gives you lower monthly payments and a lower interest rate.  Be careful however, since the consolidation loan allows you more time to pay it off, you could end up paying a lot more than if you just kept your unconsolidated loans.

If you're tight on money right now and need a lower monthly payment and lower interest rate, but don't mind paying more overall, a consolidation loan is the way to go.

Just like Federal Stafford & PLUS Loans, there are FFEL consolidation loans and Direct Loan consolidation loans.  Funds for FFEL loans come from the Federal Family Education Loan Program and are dealt with through financial institutions such as banks and credit unions.  Funds for Direct Loans come from the William D. Ford Federal Direct Loan Program and are dealt with through the individual University. 

Who's Eligible?

Assuming you were eligible for all the loans you've already received, and that you're making your payments on time, you'll probably be eligible for a consolidation loan.  The more important question is, "which loans can I consolidate?"

Here's a start to the list: Federal Perkins Loan, Stafford Loans, & PLUS Loans.  For a full list for FFEL Consolidation Loans, contact your lender.  For a list of Direct Consolidation Loans call the Loan Origination Center's Consolidation Department at 1-800-557-7392, or visit www.loanconsolidation.ed.gov.


How do I get the Loan?

The easiest way to get an FFEL Consolidation Loan is to go to the same lender that holds all of your loads and obtain information from them.  If you have loans at different lenders, pick one and ask them for the necessary forms and procedure.

To get a Direct Consolidation Loan contact the Department at the number or website listed above.

How much do I pay?

That all depends on the loans you have out.  You can count on a lower fixed-interest rate for the life of the loan.  As for the monthly payments, there really is no way of giving a rough figure.  Again, talk to your lender for details.


What are the payback terms?

A consolidation loan is designed to give you more time to pay back the loan with a lower monthly payment.  Usually this time is between 10-30 years.  Specific terms depend on how much money you have on loan.  Whether or not you have 10 or 30 years to pay off the loan, it's advantageous to pay off the loan in full as soon as possible.

That's the basics of Consolidation Loans.  If it seems like something that could work for you, talk to your lender.