Student Loan Consolidation Made Easy

Student loan consolidation is one opportunity I failed to take advantage of when I should have. Though student loan debt is typically considered “good debt” (because it shows an investment in your future) and interest rates are lower than other loan categories, rates can still go up over time, and student loans can be a burden if you have more than one.

That means there is still money to be saved by consolidating.

When Should You Consolidate?

Student loan grace periods typically expire within a year of graduating, so the second year after graduation is the ideal time to consolidate student loans.

You shouldn’t consolidate yet if one or more of your loans are deferred, either because of your initial grace period, because you went back to school full-time, or you received a deferral for military or other public service. If you do consolidate during a deferral, you may need to begin making payments immediately rather than at the end of the deferral period.

If you have been paying back a student loan for several years already, it’s not to late to consider consolidating.

What kinds of loans qualify for consolidation?

1. Private student loans. Private student loans have higher interest rates than federal student loans, which are subsidized by the government to make education more affordable. Consolidating private student loans can cut your interest rates substantially.

2. Federal student loans. Even with their low, subsidized interest rates, carrying more than one federal student loan means more monthly bills and the increased chance of missing a payment. Consolidating your loans into one can not only save you money but also make managing your repayment much simpler.

Will I qualify for student loan consolidation?

Even if you have some credit blemishes in the past, you can probably still qualify for a money-saving consolidation loan. Just don’t default on student loans!

Unlike credit card and other debt, federal student loan debt cannot be discharged in bankruptcy, and failing to repay federal debts can lead to other severe consequences, including the loss of social security benefits when you retire!

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


  1. Just make sure you don’t get roped in by a scam company. Do research on the company you’re consolidating with first.

    Also, try to avoid the “graduated payment plan”. I didn’t learn that my first 2 years of payments were only interest until year 3 when they payments went up. Now that it’s in year 5 of repayments, I’m actually paying almost of of the minimum payment to principal.

    However, that loan is the next one to be knocked off after we pay off one of our cars this year.