Federal Student Loan Consolidation Programs: What Factors Need To Be Known

When it comes to handling the cost of education, there are a lot of finance options available to college-goers. Amongst the favorites are federal loans to help cover the payment of tuition and living expenses. But over the course of their studies, students take on more than one loan leaving them with large debts by graduation. But federal student loan consolidation programs can alleviate that pressure.As with all forms of debt, there is an art to effectively managing college debt, which comes down to careful planning. But in order to fully benefit from a consolidation program, it is necessary to meet a set criteria, so when it comes to federal programs, not just anyone can get one.The reason is that such funding is reserved for those who need it most, whereas private consolidation loans can be availed of by those who simply need to restructure their spending. Student loans sponsored or issued by a federal government are different. But there are other factors that must be kept in mind too.Conditions for Federal ConsolidationThe critical point is that federal student loan consolidation programs are designed specifically for students who have received funding from their federal government. For this reason, no privately issued loans are applicable to the program. This includes bank loans, credit union loans, any loans secured from family members, and company loans.There are private consolidation loans available from traditional lenders, so managing college debt accrued from private loans is not a problem. But the terms of private and public loans are quite different. Federal financial aid is available at lower interest rates than those from traditional lenders, and any attempt to mix the two in one consolidation plan will see that advantage lost.However, student loans that have been secured from a public source can still boast such benefits even after consolidation. One of the biggest advantages is the fact that no credit checks are undertaken by the lender.The Advantage of No Credit ChecksIdentifying the advantages of no credit checks when applying for federal student loan consolidation is not hard to do. For any borrower who is struggling to meet repayments, bad credit scores are practically a certainty. And in most cases, this would mean a higher rate of interest charged by lenders, thus making a consolidation loan potentially more troublesome than helpful.Consolidation programs that are either issued by or supported by federal governments are not affected by the credit rating, therefore making the need to check the score of an application obsolete. Instead, applicants are charged one low and affordable rate of interest, so that managing college debt becomes as stress-free as possible.But that is not to say that handing debt in this way makes everything easy. The simple fact is that student loans must be repaid, whether federal or private, so ultimately there is a responsibility to keep up repayments.Conditions to ConsiderThere are several conditions to getting federal student loan consolidation which every applicant needs to be aware of. Firstly, to be recognized as being in need of assistance, a student must be in the process of repaying a loan, though deferment of payments or being in a period of grace are acceptable too. It is also possible for parents of students to avail of the loan, if the loans are in the name of the parents.Managing college debt is not simple, but is definitely made simpler through the consolidation process. This is because of their lower monthly repayment sum, but this is only achieved by lengthening the term of the debt - for example, from 20 years to 30 years. So, in effect, the interest actually paid is higher than that paid on regular student loans. This is an acceptable compromise when faced with immediate financial ruin.