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January 9th, 2012 Leave a comment Go to comments

If you are trying to consolidate student loans of any type, the first things you should know is that there are basically two different types of student loans: Federal Student Loans and Private Student Loans.

Federal Student Loans

Federal student loans are guaranteed by the government. These loans can be low interest, have flexible payment options, longer pay periods and easier credit requirements for qualification than student loans.

These loans typically have lower interest rates, multiple repayment options, longer repayment periods, and much easier credit requirements than private loans.

Private Student Loan Consolidation

Private student loan consolidation is for loans made through private institutions to finance a college education. This loan can be used to cover the same things a federal loan covers, but is often used as a supplement when federal loans do not cover all expenses.

These loans are more difficult to qualify for and require an in depth credit check for the primary borrower. A co-signer is often required for these loans as well since the borrower is often now yet in the work force. Private loan interest rates are variable and are based on an index called the LIBOR plus a profit margin for the lender.