There are many benefits to consolidating your student loans. Lower monthly payments over a longer term, for example, can really ease your financial burden if you are currently struggling to make your monthly loan payments. Conversely, depending on the terms you negotiate with your student loan consolidation company, you also have the flexibility to pay your student loans off a lot more quickly and thus pay less in interest. Lower interest rates translate to potentially thousands of dollars in savings over the terms of your consolidated loan. Moreover, student loan consolidation is very affordable; if you consolidate through the federal government it may even be free whereas private loan consolidation companies will probably do it at a relatively low cost. The interest you pay on student loans is also tax deductible. Best of all, you have the opportunity keep more of the money you earn each month and start paying yourself.

Before you can consolidate your loans, you need to consider a few things. Firstly, you need to find out whether your loans can even be consolidated. Most federal loans like FFELP loans (including Stafford, PLUS, and SLS), HEAL, NSL, FISL as well as Guaranteed Student Loans and Direct Loans provide that option. However, you cannot consolidate your federal loans if you are still in school. Another thing to keep in mind is that federal and private loans cannot be consolidated together; if you have both, you'll end up with two consolidated loans - one federal and one private. You also need to consider whether consolidation is right for you. If you go with a fixed rate consolidation option, then regardless of whether interest rates go up or down, yours will stay the same. Therefore, if you expect rates to plummet it might be best to hold off for a little while.

Once you've made a conscious decision to consolidate your student loans, you need to follow a process to secure a loan whose terms fit your needs. This is where the due diligence comes in. Here is a quick synopsis of the essential steps we recommend:

1. Compile a list of student loan consolidation companies that interest you and contact them to get quotes and gain a detailed understanding of how their process works. Find out the interest rate and the terms and conditions you would be bound to. Be sure to ask questions if anything is unclear.
2. After doing your due diligence, decide on the company with whom you wish to consolidate your loan with and fill out a consolidation application with them. The consolidation company will then process your application and consider factors such as your debt amount, income, and credit rating and make a decision as to whether to approve or deny you. If things go well, you may be approved within a few days.
3. Once you've been approved, you will be provided with a contract detailing the terms of your consolidated loan. Be sure to read it carefully!
4. Sign the contract when you are satisfied and then start making payments as per the terms you agreed to. The loan consolidation company will pay all your student loan companies and you would owe them one monthly payment.