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Understanding student loan consolidation can be the difference between financial security with strong credit scores, and falling into loan default and the whole mess of financial difficulties that come with it. To avoid student loan default, you need to understand how student loans work, what defaulted student loans can do to your financial situation, and how student loan consolidation can help. Here are the basic facts that are most important to your understanding these issues, and how to go about acting on this knowledge.

About Student Loans

So, what exactly qualifies as a student loan? Just because you came to owe money while you were a student doesn’t mean it qualifies as a student loan. For example, credit card debt from college doesn’t qualify. An official student loan is different from other debt because it is given only to students (or parents supporting students), usually has a lower interest rate than other loans, and does not require payment (but does accrue interest) while the student is still in school.

Student loans come from different sources: some from the federal government, and some from private sources. Having multiple student loans from the same or different lenders is what makes student loan consolidation necessary.

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