Student loan debt consolidation can be a very good idea, in fact there are many ways this can work out to the great advantage of the borrower. There is a key difference in how you handle doing this, however, based on whether you have federal or private financing, or both.

If you have both of these types of financing you’ll need to handle them each separately. This is because you cannot cover your private financing with federal money, and the federal money has such good options that you wouldn’t want to give it up in favor of private. This is further explained below under each type of option.

For federal student loan debt consolidation you have a lot of options. These plans have very low interest rates, often around three percent, so this is definitely a preferable option. when you decide to consolidate you’re basically just going to make it so that you have one monthly payment to worry about and all of your debt from school is easy to take care of. You can work with them to choose a payment plan and they’re generally really flexible about how much you have to pay each month and other options.

For private student loan debt consolidation is a little bit different. You have a much higher interest rate. You certainly can pay off your federal financing with private money, but you wouldn’t want to because the interest rate is so much higher (the government won’t let you pay off private with federal). There are a lot of advantages to consolidating your private financing. You probably had little to no credit before college, and hopefully over the years you had a job, a credit card, and built up a bit of credit so you can possibly find a better interest rate. With your new loan you can look for a payment plan that will work for you, and will only have one monthly payment to worry about.

Consolidating your loans will make keeping track of these payments as easy as possible and let you set up your repayment on your own terms.