The economic problem that the country faces prompts many individuals to get loans. In the case of students and individuals who want to increase their competencies, they get student loans to finance the costs associated with undergrad and graduate school expenses. However, the problem is that because of the stressed economy, students find it hard to repay their loans. They end up being mired in debts which amount to thousands of dollars. Fortunately, they can get help in managing their debts if they choose to consolidate student loans.

1. A Major Problem - "Locked" Interest Rates

On the whole, private lenders offer student loans with higher interest rates as compared to federal student loans. These rates may fall anywhere between 8% and 15%. That is why most students opt for federal student loans. However, the problem with federal loans is the rigidity of the repayment terms. Federal student loans are subject to the rules set by Congress. Though private lending companies often manage these loans, they cannot do anything about the repayment terms.

For example, Sallie Mae is one of the private lenders which were assigned by the U.S. Department of Education to provide federal student loans in 2007. It manages a total of $178 billion for about ten million students. However, whenever students default on the payments and negotiate for lower interest rates, Sallie Mae can't do anything about it. "Often, Sallie Mae faces cases like this (negotiations) where we'd love to be able to help, but by law, we're not given that option." said Conwey Casillas, the company's spokesman. Unless the student opts to consolidate student loans, he won't be able to explore other available options apart from pure negotiations.

2. Another Dilemma - Inequality with the Loans

Students who are having problems with their debts also fail to realize the various disparities that exist in federal student lending. Instead of exploring their alternatives, many students get another loan to fend off the effects of having an unmanageable student loan. They get another debt to pay their missed repayments. In effect, they are just magnifying their debts. However, if they consolidate student loans and get the help of a debt counselor, they will be able to make the right choices and get the appropriate solutions.

One of the loan problems that student borrowers are not aware of is the discrepancy in interest rates. The rates of federal student loans are pegged to Treasury bill rates. So, while those who availed of government student loans in 2004 got interest rates that were as low as 2.8 percent, current Stafford bills now have rates of 6.8 percent.

3. Other Options that can be Explored

When students have over inflated debts and they consolidate student loans, debt counselors often recommend refinancing, often through the use of home equity or secured loans. However, Betsey Archer, a certified financial planner in Sacramento notes that this is only applicable for students who are employed. "Unfortunately, in today's marketplace, the ability to refinance a loan is very limited, especially without a job," Archer explains.

Other options which debtors can consider are negotiations that aim to lower their monthly repayments and extend their standard 10-year repayment terms. If they are in deep financial trouble, they can also apply for an "income-contingent" repayment plan. Some student borrowers who encounter unemployment and other financial difficulties as reflected by their income and family size can also ask for payment deferments which can last from three months to an entire year.

Learn more about how to consolidate debt loan at http://www.consolidatedebtloan-s.com/.