Parents who took out multiple educational loans for their children can also consolidate, and they do not need to wait until the student has graduated. It is worth noting, however, that parent and child loans cannot be combined into one. Neither can husband and wife loans. Only education loans that are taken out by the same borrower can be consolidated into one.

In addition, people who have already consolidated a loan can consolidate the consolidation again, but only if they are adding a new loan into the new consolidation. However, two separate consolidation loans may be combined into one larger consolidation.

What To Look For

If you are interested in a consolidation loan, you can shop online as well as talk to your local banks and other local lending institutions. You can also look to the federal government if you have federal loans. For instance, the US Dept. of Education offers Direct Consolidation loans, and you can also find consolidations through the Federal Family Education loan program.

You will want to find out all of the specifics involved in a loan consolidation, including any costs incurred, term of the loan, differing payment options, whether you can repay the loan early without penalty and what the minimum balance is to be eligible for a consolidation. (Note that some banks require a minimum owed of anywhere from $5,000 to $20,000 to take advantage of this option, but with a government consolidation loan, sometimes this requirement is waived.)

It is also important to note that recent legislation regarding consolidation loans has greatly affected the rules, availability and options, so borrowers may find it more difficult to find such a loan than they would have a decade ago.

Payment Options

Consolidation loans offer a range of payment options. You can often choose to extend the life of the loan beyond a standard 10-year arrangement to 20 or 30 years. You may also opt for a graduated repayment plan, which starts out very low and increases every few years, hopefully to coincide with your advancing income as your career progresses. You can also select an income-sensitive loan, which adjusts your payments based on your earnings so you most effectively manage your financial obligations.