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Top 3 Federal Loan Consolidation Programs to Help Students Clear Debts

Sadly, most college students graduate facing a huge amount of debt. But there is a range of federal loan consolidation programs to choose from that can help in clearing the debt.

It is an unfortunate reality that the majority of college student graduate with a weight of debt around their necks. College is not free, and the only solution for many is to get loans to cover the costs. Managing the resulting debt at graduation (or while still in college) can be difficult. But to aid in that task, there are federal loan consolidation programs, designed especially for students.

Of course, when it comes to consolidating college loans, there is more than simply the balance to consider. The matter is often complicated by the fact a mix of federal and private loans were taken out. Structured costs, like tuition fees, are often covered by federal funds, and living expenses by private loans. Mixing these in one consolidation program is not always ideal.

Private lenders offer consolidation programs that are suited to the costs and conditions of private loans. But there are 3 popular federal programs that student can also choose from. Exactly which one is the right one to choose is dependent on their situation and needs, but through any of them, college loans can be cleared for good.

1. Standard Consolidation

The most straightforward and, arguably, the most popular federal loan consolidation program is the Standard Plan. As the name suggests, there is nothing particularly complicated about this program, and is designed for graduates who have finally started their working lives.

This program works very simply, with the balance of each of the existing federal loans combined and the loan term than extended. Consolidating college loans in this way allows the monthly repayment to be lowered. The term limit is 10 years, so if the combined balance is $45,000, repayments are $385 instead of perhaps $775 over 5 years.

Also, the interest on the consolidation loan is set at a low fixed rate, making it perfect of fitting into some very tight budgets. It is highly effective in clearing any federal college loans that are outstanding.

2. Extended Payment

A second popular option is the Extended Plan. This is very similar to the standard federal loan consolidation program, with the only difference being the term limit, which is extended to a maximum 30 years. This makes it ideal for students who are facing very large debts, sometimes as much as $100,000.

Of course, the longer term means that the required monthly repayment is drastically reduced, and given the potential size of the debt, this can be extremely important. For example, a $100,000 debt over 30 years requires payments of just $275 per month, which makes this method of consolidating college loans worth it.

The one drawback is that the amount of interest paid over the lifetime of this lingering loan is quite substantial, but as a way of handling such massive college loan debt, it is highly effective.

3. Graduated Payments

A third federal loan consolidation program to consider is a graduated payments program, which means the repayment structure is staggered in line with the earning capacity of the student. This means that many students can actually begin to repay their debts while still studying.

Consolidating college loans means that very small repayments are made for the first 2-year period, with the sum increasing in regular increments every two years subsequent. For example, if the combined balance is $45,000, with a 10-year term, repayments could start as low as $50 per month.

Then, after 2 years, it increases to $100, then to $150 after another two years, and then to $200 for the next 2 years. The term could run as long as 30 years so the sums can vary dramatically, making it a practical manner of repaying even very large college loans.

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Devora Witts is a certified loan consultant who helps people get approved for Loans for People with Bad Credit and Bad Credit Mortgage Loans. To get aid with your financial situation you can visit her at

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