On the heels of student loan debt surpassing credit card debt last year, President Obama announced changes to federal student loan repayment programs. As I blogged in October:

To help ease the average $22,000 in debt owed by graduates of 4-year public colleges, as well as the average $28,000 owed by graduates of private schools, the Obama administration announced the following:

1) Starting in 2012, maximum required student loan repayments cannot exceed more than 10 percent of a graduate’s discretionary income (previously 15 percent). And any debt remaining after 20 years will be forgiven (previously 25).

2) The 5.8 million college graduates with loans from two federal loan programs will be allowed to consolidate them into one, which will save some borrowers hundreds of dollars a month.

Now comes news of more specifics regarding the new federal student loan consolidation program. If you have both a federal student loan originating from the government, as well as a federal student loan originating from a bank or other lender, you can consolidate the two into one loan with a lower interest rate. PLUS loans qualify, but Perkins loans do not.

As reported by Forbes‘ Liz Davidson, “First, you subtract a quarter of a percentage point from federal loans originated at a bank or other lender. The consolidated loan rate will then be an average  of the rates from each of the two types of loans, weighted by the size of the balances of each loan.”

However, if you are looking to lower your monthly student loan payments, the traditional consolidation program may be better suited to you. Under the new program described above, you keep the terms of your current repayment program. On the other hand, the traditional consolidation program restarts those terms, spreading the balance you owe over 10 years time ( i.e., lowering your monthly payments).

So whether you’re looking to make smaller payments each month or save on what you pay in interest over the life of your loan, it’s well worth your time looking into your eligibility. If you are not already participating in a student loan consolidation program, call the Education Department at 1-800-433-3243 to see if you qualify.

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