If you're considering consolidating your federal student loans you first need to understand the differences between federal student loan consolidation and its private counterpart.
It is generally not beneficial to consolidate federal student loans. Federal student loans have fixed interest rates that are usually lower than rates available elsewhere in the market, so locking in a low rate at the right time is not a concern.
For borrowers who are struggling with high monthly payments there is a different, often better option. Income Based Repayment has made once crippling federal student loans more manageable, so if you're considering federal student loan consolidation as a means to avoid default, look into IBR first. If you qualify, you can reduce your monthly payment to an amount that is no greater than 10% of your income, and if you make under a certain amount, you might not be required to make payments on your federal student loans at all.
By avoiding federal student loan consolidation, borrowers can keep many of the perks they enjoy with their federal student loans while reducing their monthly payments. There are benefits of federal student loans that could be lost if you consolidate. For example, Perkins Loan holders become ineligible for the deferment subsidy after they consolidate, and on time payment incentives, such as a rate reduction reward for 48 on time payments could be lost as well.
Be sure to research your options and know exactly what you're needs are before you pursue federal student loan consolidation. Once you consolidate there is no going back, so don't take the decision lightly.
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