Loan consolidation is the process of grouping together several different loans into one, usually for both ease of repayment and to lower interest rates. Student loan consolidation has gone through a number of changes since 2006 and with new laws taking effect governing credit cards, more changes will come in 2010 and years to come.The 155 page 2009 Credit Card Act mandates changes to credit card company fees, interest rates, billing statements and rules for extending credit to college students that go into effect from February 2010 through August 2010 (along with the 2010 tax law changes). These laws have resulted in credit card companies making changes to consumer's credit cards ahead of the new provisions taking effect.A 2008 College Board study found that two-thirds of students that graduate carry an average of $22,700 in loan debt (this figure does not include students who carry loans but did not graduate). Though different laws have gone into effect that changes either the benefit or process of student loan consolidation, the Federal Direct Loan Consolidation offered by the US Department of Education is available to nearly every borrower.
Student loans are available in two types.
The first is a subsidized loan, which does not require the student to pay any interest while enrolled in a college, university, or school. Instead, the interest is subsidized by the government or is set in abeyance until after graduation. The second loan type is a non-subsidized loan. A non-subsidized loan requires a student to pay interest while attending school.
Benefits of student loan consolidation are:
* One payment for multiple loans
* A low or lower fixed interest rate
* An extension of time to repay the loan
* A lower monthly payment
* Removal of a co-signer
* Eliminating a parent, guardian, or relative's liability
* There are no fees to consolidate student loan debt

Student loans must meet predetermined criteria for consolidation, calculated by the weighted average of existing student loan rates. The weighted average percentage is typically rounded-up to the nearest 1/8 percent but cannot exceed 8.25 percent. Interest rates will be determined by the student loan types when first taken out. The best time to consolidate student loan debt is within the grace period after graduation (usually a six month post-graduation period). While loan consolidation at this time does require immediate payback, the payments will not begin for a few months and lowers the interest rate.For students with loans that were not government granted, debt consolidation is still possible. Students that hold private student loans may be eligible to consolidate with the original lender. Should the original lender not offer competitive rates, it is best to shop around.
Unlike federal student loan consolidation, private student loan consolidation is based on the student's credit score (and that of the co-signer).
Student loans are eligible for consolidation if they meet the following requirements:
* The student must not be enrolled more than half-time
* The student must be currently repaying the loan or is in a grace period
* The student has not previously consolidated his or her loans