What types of student loans are available?

By Dennis Powell

Ok, you've worked your butt off at college for the last four years, and thanks to your student loans you were actually able to spend most of your time on schoolwork instead of flipping burgers. But now you're out of school, starting on a new career path, and suddenly those friendly student loans are looming ominously as your grace period draws to a close. Fortunately there are a variety of student loan consolidation programs available to help grads and former students make the transition to the regular work world without the specter of unreasonably high payments.

The first place many borrowers will look for a consolidation program is FFEL consolidation. Federal Family Education Loan consolidation offers the option of putting all of your federally funded education debt - both subsidized and unsubsidized - under a single plan. This option can even work for those unfortunate souls who have been in default in the past, and offer fixed rates, extended terms to help you get started in your new life without worrying about loan payments eating up most of threat tiny entry level salary.

Private consolidation loans can package all of your non-federal loans into a single easy to make payment often with extended terms to lower the monthly bite even more (Though at the price of a higher overall cost.) Private and federal loans cannot generally be consolidated into the same package due to the variance in interest rates between them. Private loan interest rates are based on the borrower's credit rating so if your credit rating has improved since graduation - through a better job, etc. - they may be a good option.

PLUS loan consolidation offers the chance for parents who have borrowed to fund their child's education to get many of the same benefits as FFEL and private loan consolidation. In addition to an interest rate reduction Plus loan consolidation offers the option of extended terms to make repayment more manageable. As with any consolidation loan, extended terms also increase the total amount of the loan so borrowers need to make sure that they are making the right choice for their financial situation.

Another option to a traditional loan is an additional mortgage on a piece of real property like a house of land that you may own. Some students parents will take this option to pay off the loans and the student can they make payments directly to mom and dad. Private personal loans from family members are yet another possible way to get the worry of several large monthly payments off your back, and some businesses offer tuition reimbursement for their employees.

New technologies have come to the lending world where the idea of peer-to-peer programs and micro-financing has taken root. Peer to peer financing allows the borrower to present a request for funding to a group of potential "micro-investors" who then bid on the loan by offering different rates and terms. Once a deal is struck the network services the loan, ensures payments are made and the necessary paperwork is taken care of. For borrowers with needs outside the comfort zone of traditional banks a P2P loan may help them get started down the path to getting their loans paid off.

You did it! You managed to finish school and are about to make your way into the "real" world. Thanks to the variety of consolidation programs available for the modern education loan, you can get started on the right track with manageable debt load and a solid plan for your financial future. Find the package that works for you, make a plan and stick with it, and you'll be paying down those student loans in no time.

About the Author:

Dennis Powell writes about how to refinance consolidated student loans and the consolidation of federal loan programs for students.