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First any student loan that is not through the government will be a separate consolidation with most student debt consolidation companies. The fact is any student loan through Student Loan Finance Corporation or the US Department of Education can be consolidated through the federal government program, with a significantly lower rate than personal loan student debt consolidation. You will also find out that any private or personal student loan, not obtained through the federal government cannot be consolidate with the government program. Here is an example of what I mean: A student decided that a loan through the state they lived in would be more beneficial because the student could get a larger amount than what the federal government student loan program was offering; however for the first two years this student had loans through the federal government. At the end of the student’s four years this person decided to consolidate all of the loans. The federal government student debt consolidation program would only offer the US Department of Education Loan and the Student Loan Finance Corporation Loan to be consolidated, telling the student that the other loans through the state were considered private loans. Therefore this student still has two student loan payments, one for the federal government loans and one for all other loans including the state student loans. The reason behind this decision was the 8% interest on the state student loans and the 2.5% interest on the government student loans. The student would have ended up paying more for the government student loans if this person consolidated into one monthly payment.

With debt consolidation loans you have a goal. You want to ease your financial strain, reduce your stress, and gain a better monthly payment. There are a couple of ways you can do all three with debt consolidation loans. The first thing you want to do is be smart. Any debt that you owe, which charges a small interest rate or has no interest rate should not be included in the debt consolidation loan. You also want to check your different options. You may find refinancing your mortgage into a debt consolidation loan offers a lower interest rate than the straight debt consolidation loan without collateral. In fact this can almost be a guaranteed statement. You aim is a lower interest rate on high debt loans such as credit cards, mortgages, home equity loans, personal loans, and car loans.

When you seek debt consolidation loans through a lender you need to make sure the interest rate they offer you is lower than your other debts. For instance if you can get a debt consolidation loan for 12%, but your mortgage is at 6.5% you may find upon doing a calculation that you are not saving enough money to make the change in loans worth it. You may also find that any credit card, car loan, or personal loan that is above 12% can be rolled into a debt consolidation loan and save you money. Even if you can’t get your expenses per month down to one low monthly payment, combining three or four high interest loans into one lower monthly payment and less interest is actually going to save you more money, than continuing as you are.

It is always better to reduce some of the stress and financial strain. Whenever you decide to obtain a debt consolidation loan you need to make sure you are gaining the better end of the deal, by doing several calculations regarding your finances.