When you combine all of your loans, you have many different student loan repayment options. Depending on how far in debt you are, you can choose a length of repayment of up to 30 years. Spreading your payments over multiple years can dramatically reduce your monthly payments.
Student loan consolidation also offers you lower interest rates than your individual loans. Student loan consolidation companies entice business by beating the rates the government provides by a minimum of 1/4%. The percentage may initially seem small but it really adds up if you calculate it over 20 or 30 years.
Some companies are quoting rates as low as 1.65%. Although getting an interest rate that low is very rare, you can still get unbelievable interest rates. With the Fed cutting interest rates recently, money is cheap in all markets, especially student loans.
There are a few important facts to realize when considering student loan consolidation. The first and most important is that you can only consolidate once. Make sure you are getting a rate and plan you can live with for many years. Plus, do not consolidate unless you are completely sure you are done with college and federal loans. There are no exceptions to this consolidation rule.
Another point people considering student loan consolidation should know is that you cannot consolidate your federal loans with private loans. The reason you get such good interest rates on federal loans is that the government backs the funds. If the government backs the funds, lenders don't bear much risk in taking your account. Private loans can be consolidated together, but not combined with government issued loans.