Apart from the private financial institutions, there is another type of loan consolidation program that debtors with multiple loans can opt for, and this is offered by the U.S. federal government.

The federal consolidation loans that are the easiest to obtain are those loan programs for students, which makes a lot of sense. After all, students and recently graduated students are the ones that need a lot of help when it comes to finances. With little or no source of income, they actually have to pay the whole gamut of student loans, medical bills and credit card debts. The U.S. Department of Education thankfully has loan programs in place that consolidate all federal education loans and allows students to pay for these loans through a single monthly payment.

If you have multiple education loans, then thanks to the Higher Education Act, you actually have the right to consolidate your loans. This act created federal consolidation loans under the Direct Loan program and the FFEL, or Federal Family Education Loan program.

Under federal consolidation loan programs, as their name implies, only federal loans qualify for consolidation. In order to get a Direct Consolidation Loan, one must already have at least one federal education loan through the FFEL or Direct Loan programs. In addition, the status of the loans must be either that they are still in their grace period, or they must be in deferment or in default.

You can get more details about federal consolidation from Federal Student Aid, which is part of the United States Department of Education. In addition to FFEL loans, there is another type of loan, which is the CBSL loan. These two loan types encompass a wide variety of loans, such as Federal Parent PLUS Loans, Federal Direct Loans, Federal Direct Grad PLUS Loans, Subsidized Loans For Students(SLS), and Federal Stafford Loans both subsidized and unsubsidized, as well as Health Professions Student Loans, Federal Nursing Loans, Federally Insured Student Loans, and Federal Perkins Loans.

FFEL and CBSL loans can not be consolidated together and must be managed through two separate consolidation programs, each geared toward one type of loan or the other. Regardless, federal consolidation loans can greatly reduce the amount of money you pay monthly, perhaps up to 40%. The repayment term of these loans is anywhere from 10-30 years.

If your loans consist of both private and federal student loans, it is definitely the wisest choice to make the federal loans your top priority. Loans that were granted by the United States Department of Education can have effects on your financial state long after you have graduated. With these loans, if you default, the federal government can deduct up to 15% of your gross pay to help recover the debt, as well as taking 100% of your ta returns until the debt is repaid.

Having several federal loans at once need not stress you out. The federal government has actually provided for a solution to this stressful situation through its federal consolidation loans. Keep in mind though, that federal consolidation loans are still debts that need to be paid.