Private student loans are granted and managed by regular lending institutions – banks, college foundations, various state agencies – and typically charge a higher fixed or variable-interest rate than federally funded loan programs.Private student loans are credit-based, meaning student borrowers with better credit scores will pay lower interest rates than those with lower scores because banks assess the risk of each borrower.

The creation of this one loan, which may reduce monthly payments and extend the lending time, creates the chance for easier repayment of all federal loans.

In essence, when you consolidate your student loans, you are really refinancing them.

Consolidated public loans under the federal government program are considered paid in full by the new loan.

The program was created to encourage educational pursuits by making otherwise unmanageable public loans practical for repayment and in a timely fashion.

With federal programs expending approximately $104 million in 2010-11, student loan consolidation has been a well-received solution to student debt management.

Prior to July 1, 2006, students could consolidate their public loans while they were enrolled in school full time. Students can either consolidate during the six-month grace period after graduation or wait until after the loan enters the repayment phase.There are two primary types of educational loans — private and federal.While both may be eligible for consolidation, it is important to think of these two types independent of each other when considering consolidation.Learn more about federal student loans Private loans, also referred to as alternative education loans, are backed by private lenders, while federal loans are backed by the U. The first part of your plan is providing a snapshot of your overall financial picture to a trusted partner of Your options are determined by the amount of debt you carry and the current difficulty you have in fulfilling your monthly obligations.Even if your student loans don’t strain your wallet, consolidating them into one payment could free up additional cash, or help to structure payback of your loans on your terms.