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How to Save Big With Federal Student Loan Consolidation

Updated on March 26, 2011
Is Your Federal Student Loan Debt Looming in the Distance?
Is Your Federal Student Loan Debt Looming in the Distance? | Source

And Three Words Descended From the Heavens: Student Loan Consolidation

Boy they make those student loans easy to get, don’t they?

“Do you have a pen?” your school’s financial aid advisor asks.

“No,” you answer, thinking, ‘I should probably get me some pens -- I may have to write a paper, or something, now that I’m in college and stuff. Umm, need some beer, too.’

“Oh, no problem,” the dorky fellow with the crooked tie and matching smile answers from across the desk, reaching into his drawer. “I’ve one here for you.”

And that, my friends, is that. Yes, that’s all it takes to get a federal student loan. Can you sign your name? That’s the only criteria. Oh, and being enrolled in an accredited institution, of course.

And once that original master promissory note is signed, it gets even easier the next time.

And the time after that. Etc. . .

Until two bachelor’s degrees, two master’s degrees, twenty-one semester’s worth of student loans, three grace periods and two forbearance periods later, with interest being capitalized the whole time (only on the unsubsidized loans – but we don’t want to get technical here, it interrupts the flow of my freestyle), you drive down the road on your way to work in the morning – not to your high-rolling Wall Street job peddling toxic credit default swaps, not to your golden-egged ambulance-chasing malpractice firm where you happen to be a partner, and not to your real estate mogul bad self penthouse office in the sky, but to your job as a teacher making, well, what teacher’s make, and all you see on every billboard you pass are the ginormous (it’s a word, really, it’s like Van Morrison’s ‘fantabalous’) numbers of your student loan totals and the absolutely implausible amount they want you to pay each month.

Dorky guy with crooked tie, I’ll bet you are still there now, aren’t you, in that same cubicle, with that same barren decor, peddling your flashy dreams to young, starry-eyed hopefuls. I should have skipped the pens and double-downed on the beer. A few stays at the Betty Ford Clinic would have been a lot less costly. Do they have financing?

Don't Forget What the Dorky Guy Taught You

When you consolidate your FFEL (Federal Family Loan Program) or Direct Loans, including FFEL, Direct and Stafford subsidized and subsidized loans, previously consolidated loans, and certain PLUS loans, you are going to need something from your past – a pen.

Yep, the good thing about consolidating your federal Direct, FFEL and Stafford loans is that, just like getting the loans, it’s pretty easy to consolidate them.The only stipulation is you can't be in default on any of your existing federal student loans.

How is it possible a program run by the government can be so simple? Some things are not to be explained, you just have to accept them as they are and put faith in the idea that some supreme being somewhere knows what the hell is going on. At least, that’s what they teach you at the Betty Ford Clinic.

Save Me Money, Preacher Man, With Your Federal Student Loan Consolidation Wisdom

Can you feel it?

I said, "CAN YOU FEEL IT?"

Praise the Lord and strike me down Jesus if I don't see some federal student loan consolidation savings coming straight for us, Amen!! It's like a freight train of piggy banks, an F-18 formation of additional funding, a flotilla of charity, and we are the bulls-eye. Oh, look at it now, it's coming closer I can feel it, it's getting bigger, I can see it, yes it's getting louder, oh Lord, I can hear it, so loud that it's keeping me up at night I can't stand it, we are gonna find that promised land together praise the Lord, Jesus, Amen!

Federal Student Loans Eligible for Consolidation

  • Federal Stafford Loans
  • Direct Loans (including TEACH)
  • Federal Consolidation Loans
  • Direct Consolidation Loans
  • Federal Insured Student Loans (FISL)
  • Guaranteed Student Loans (GSL)
  • Federal PLUS Loans
  • Direct PLUS Loans
  • Federal Perkins loans
  • National Direct Student Loans (NDSL)
  • National Defense Student Loans (NDSL)
  • Federal Supplemental Loans for Students (SLS)
  • Health Professions Student Loans (HPSL)
  • Health Education Assistance Loans (HEAL)
  • Nursing Student Loans (NSL)
  • Auxiliary Loans to Assist Students (ALAS)
  • Loans for Disadvantaged Students (LDS)

Benefits of Consolidating Your Federal Student Loans

There are a number of benefits to consolidation for the borrower when consolidating federal educational loans. A question that borrowers have is: Many of my loans have different repayment terms and different interest rates -- how will they determine these items for my consolidation loan?

For the repayment term, you will usually have options and will be able to choose -- typically from 10 to 30 years, depending on your total federal student loan debt burden. Spreading out your repayment term over a longer period will lower your monthly payments but increase the total interest you will pay to the lender over the life of the loan.

for the interest rate, the lender will determine this by taking a weighted average of your exisiting loan balances and interest rates, so you will essentially pay the exact same interest rate overall that you had been paying prior to consolidation.

In addition, borrowers enjoy the following benefits:

  • Easier payment management by turning multiple monthly payments into one monthly payment.
  • There is no minimum total loan amount needed to consolidate.
  • There are no charges or fees to consolidate your federal educational loans.
  • Deferment options if you return to school or face economic hardship.
  • Typically results in lower monthly payments when all of your federal educational loans are consolidated.
  • Payment plans extend to 30 years, depending on total debt accrued.
  • Loan forgiveness for certain borrowers.

Good luck with your federal student loan consolidation. And always remember these wise words: "Running into debt isn't too bad. It's running into creditors that hurts." ~ Anonymous

You may also be interested in this article on federal student loan forgiveness programs.


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    • Genna East profile image

      Genna East 6 years ago from Massachusetts, USA

      HP has once again neglected me to send an e-mail with a list of hubs by my favorites authors (another glitch), so I have to go prospecting yet again.

      This hub was very helpful…only wish I knew about this when we put our son through college. Oh well, timing and all that. :)

    • Mike's Corner profile image

      Mike's Corner 6 years ago from Maryland

      Thanks, Fay, and glad to hear your daughter has benefited from a student loan consolidation program :)

    • profile image

      Fay Paxton 6 years ago

      Yes, Mike spread the word. Student loan consolidation saved my daughter. It's a Godsend. Thanks.

      voted up and very useful