With federal student loan consolidation, student borrowers save time and money, as all loans are combined together into one simple loan, making payment more manageable. There are no fees, charges or prepayment penalties. In addition, depending on the repayment term, borrowers easily can save thousands over the long term.

Federal student loan repayment can be as much as 30 years, depending on the total balance of the student borrower. Repayment options include graduate and income-sensitive. Also available are a renewal deferment and forbearance options.

Federal student loan consolidation is completely free. It is legal for a lending institution to charge fees for a federal student loan consolidation. Student loans disbursed after 6/1/06 have a fixed interest rate of 6.8%. One of the best benefits to consolidating your federal student loans is that there is no credit check. So this is a good way to improve your credit, because when you consolidate it shows up as a paid off loan.

Federal loan consolidation occurs when you combine one or more eligible federal student loans into one loan. Federal family education loans, direct loans, Perkins loans and parent plus loans are all eligible.

You should compare the costs of repaying your unconsolidated loans with the overall cost of paying your new consolidation loans. One thing to consider is whether you will lose any of your borrower benefits once you consolidate such as interest rate, interest rate discounts, or principal rebates. These benefits can significantly reduce the cost of repaying your loans over time. Typically lenders will offer better borrower benefits as an incentive for partaking in their student loan consolidation program.

Another thing to consider is whether or not you will lose discharge benefits from your Perkins loans. You should carefully review your consolidation options before you apply.

Your parents or legal guardian can also get a direct or Federal Family Education PLUS consolidation loan if they have obtained a PLUS loan for you. PLUS loans can only be consolidated once the loans have been fully disbursed.

If you're in default on a Federal Student Loan you still might be able to consolidate as long as a defaulted loans or loans are not subject to a judgement or wage garnishment.

The best time to consolidate your student loans is during your grace period. During your grace period you will receive an extra .6% off of your interest rate, which will be locked into your new consolidation loan rate. Once you've entered repayment or forbearance you still can consolidate but you lose that .6% benefit. You can no longer consolidate your student loans while you are in school.

There may be some disadvantages to getting a consolidation loan. For example, a consolidation loan will typically stretch out the amount of time you have to repay, resulting in more interest over time. This can be offset by significantly reducing your effective interest rate and by paying extra money towards the principal each month.