Jill Fier

As seniors rush to hand in their graduation applications today, the reality that they’re almost out of the place they have been calling home for he last four years is settling in.

The familiar faces of students and teachers we have come to know will soon be replaced with unfamiliar faces and situations, as well as unwelcome bills.

That’s right, leaving school means you have to start paying off student loans. You may have not even given a thought to your future as you signed away on those promissory notes the summer before your freshman year and came to registration with a zero balance on your student bill, but now it is time to pay up.

One option for students who are overwhelmed with college debt when they graduate is to consider federal student loan consolidation.

“Federal student loan consolidation is combining federal loans to lock in an interest rate and also to set repayment terms over an extended period of time,” Jay Larsen, director of financial aid, said.

Larsen said that when a student takes out a federal student loan, repayment is set up over a 10-year time period. Loan consolidation enables students to stretch that repayment over an even longer time, even up to 25 yeas, so that monthly payments can be smaller. Though this does mean that the borrower will pay much more in interest charges.

Larsen said that another advantage of loan consolidation is that you will have a fixed interest rate. With unconsolidated loans, interest rates can change annually on July 1.

Larsen said that federal student loan cosolidation is not a good option for everyone, though. “I’m not advocating loan consolidation for every borrower because it is not for everyone,” he said.

There are some disadvantages to loan consolidation for certain groups of people.

A person is only allowed to consolidate student loans once-ever. That means if you are planning on going back to school for a graduate or professional program, you should keep your loans the way they are now because you are more than likely to have some more in the future.

Consolidation may also be a disadvantage for students going into career fields that use loan cancellation, or forgiveness, to attract employees.

“Cancellation is usually found when a student goes into what are called demand or need areas,” Larsen said. Some of those career fields may include education in low income areas, special education or shortage areas like math and science, nursing, law enforcement, the U.S. Armed Forces, or public or non-profit family services agencies. These career also usually offer deferment options.

A final disadvantage of consolidating loans that was mentioned earlier in the story is that if repayment is stretched over a long period of time, the borrower will pay much more in interest charges.

So how do you know if federal student loan consolidation is for you? Well, consider what potential career or education options are in the future for you, and talk to someone in financial aid for their advice if you need to.

Here are some other tips to consider:

*Borrowers who have only one lender have to consolidate with that lender. Borrowers that have more than one lender can chose who to consolidate with.

*Loan consolidation only applies to federal loans, not private loans you went to the bank to take out yourself.

*Try to stay with a local lender so communication between the two of you is easier.

*If you are having trouble making payments, do not let your loans go into default. Many lenders offer deferment options in cases of financial hardship.