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Consolidating Federal and Private Student Loans

Many students find that they require more money for college than the federal aid limits allow so they must take out loans from private sources. When it comes time to consolidate what do you do with all these loans?

Most students find it beneficial to consolidate their loans. It cuts down on the number of lenders you have to send checks to, lowers your payments, and can even lower your interest rate. But should you consolidate all of your loans together?

There are some pretty big differences between federal and private student loans.

Federal student loans offer

• Lower interest rates

• 3 years of deferral

• 3 years of forbearance

• Interest is tax deductible

• Loan forgiveness for some professions

• Cap on maximum possible interest rate

• No credit check

Private loans

• Always variable interest rate

• Much higher interest rate

• No deferral or forbearance

• Require a credit check

When you consolidate your federal loans with Federal Education Services’ consolidation program you retain all of your federal benefits. Your private loans have none of these benefits. When consolidating them together you cannot bring private loans into the federal program so you must take your federal loans to the private program. By doing this you will lose all of your federal benefits and pay the higher and variable private interest rates. Even though having to make a single payment is more convenient than two separate ones it is important to consolidate your federal and private loans separately. Don’t give in to the temptations of convenience!

Federal Education Services is a company that specializes in federal student loan consolidation, Stafford loan origination, PLUS and Graduate PLUS loan origination and as a resource for students with questions regarding educational financing. For any questions regarding this article please contact Federal Education Services. A friendly loan specialist can be reached at (877) 222-4727 or you can find us on the web at

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