Other than a mortgage, the largest debt many people will ever take on is student debt—paying for college or graduate school. Student debt is typically made of up of several different loans, taken at different times (and therefore often at different rates), such as for different semesters. This debt can become overwhelming in both its complexity (how many loans to track and pay) and in terms of its amount—principal, interest, and monthly payments. Consolidating student debt—replacing several loans with a single loan—will not reduce the principal, but it will simply debt as well as afford the debtor a way to reduce monthly payments and often the interest rate.
All federal education loans, such as the Stafford program are guaranteed: that is, the federal government will make sure the lender gets paid, even if the borrower can’t pay. That guarantee is what induces the lender to lend to people who have bad credit, and to lend at more favorable rates. Some loans are also subsidized, in that the federal government will pay interest charges while the borrower is in school and for 6 months after that, or during any valid deferment or forbearance (i.e. payment “holiday”) periods. These, though, are typically only available for lower-income borrowers. Anyone, however, can apply for an unsubsidized loan, in which the borrower is responsible for all interest.
In a word, yes. Federal loan consolidation is available. In fact, it’s available through services and programs supported by the government, to make it more accessible.
Consolidating Federal loans—including consolidating unsubsidized loans—is conceptually the same as consolidating any debt: several smaller loans are paid off with and replaced by a single larger loan.
Advantages: less debt to keep track of; depending on prevailing interest rates, may be able to lower the average rate; if the period to repay is stretched out, the monthly payments are reduced.
Disadvantages: if total payment time is increased, so is the total amount of interest that will be paid; loans cannot be “unconsolidated,” so the borrower loses the ability to pay them off piecemeal or one at time—it becomes “all or nothing” repayment.
Lawyers do three main things: they represent clients in court; they draft or review legal documents; and perhaps most importantly, they provide expert advice. When consolidating loans, court is (or shouldn’t be!) an issue, but loan documents are complex, as are the factors to consider in making the right decision. Having someone knowledgeable to advise you, such as an experience school loan consolidation lawyer, and to look out for your rights can be the difference between a bad outcome and a good one.