If you have earned your degree, now it's time to take on the responsibilities of becoming a college graduate, which includes repaying all of those student loans that accrued during the past four years. Student loan consolidation services can put you on the road to paying off your lenders.

Before you begin, there are a few basics that apply to all types of student loans:

1. You can only consolidate federal student loans using a federal consolidation service.
2. When trying to consolidate private student loans, you may have tons of options to choose from, but interest rates may be higher than when consolidating federal loans.
3. Some federal loans, such as Federal Perkins Loans, are better off not being consolidated because you lose the benefit of the government paying all interest on these loans while you're in school.

There are many benefits to consolidating your loans, including:

1. The ability to lock in a lower interest rate.
2. Simplification of repayment.
3. Lower monthly payments.
4. The ability to save money.

Action Steps
The best contacts and resources to help you get it done

Consolidate federal student loans first

Since these loans are at a fixed interest rate, consolidating them first and establishing a good credit rating by keeping up with the payment can get you a much lower interest rate when it comes time to consolidate private student loans.

I recommend: Check consolidation options offered under federal loan programs such as Sallie Mae, Direct Loan programs and FFEL/PLUS loans. Note that Direct Loans and FFEL/PLUS loans cannot be combined and have to be consolidated separately, and federal law prohibits consolidation of federal student loans while you're still in school.

Compare interest rates for private student loan consolidation services

There are many private student loan consolidation programs available offering all sorts of plans to entice you. Be careful and investigate these plans carefully so you don't end up mortgaging your future to repay them.

I recommend: Check with your local bank first to see what kind of interest rates they offer. These can vary from a set rate (which may end up being high in the future), a variable rate (which may go up or down, depending on other criteria) or a balloon rate, where you pay very little or no interest in the beginning, with an agreement to refinance pay off the balance within a set period (usually five years). To see examples of the various programs and how much they will cost check out Student Loan Consolidator, Wachovia, and FinAid.

Beware of school loan consolidation scams

There are many so-called financial aid companies out there that are offering deals that seem too good to be true.

I recommend: For tips on what to look for--and avoid--check out Student Loan Tips and Advice and Student Loan Fraud.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Make sure your monthly payments fit into your budget. The reason for consolidating these loans is to make it easier to pay them off.
• •  Your original student loan lender might offer you a better rate than other lenders.
• •  Beware of fees associated with the filing of your application. It's often a good idea to avoid these lenders.