You’ll have an opportunity to add financial details from other sources to the data used by FACT.The government has a strong interest in making it possible for students to pay off their educational loans, and at the end of 2012 it instituted a new form of the income-based repayment plan called Pay As You Earn (PAYE).PAYE is designed to lower your monthly student loan payments, and thus you must have a to qualify for the plan.

That is a circular definition, but nevertheless a clear one after the two amounts are calculated and compared.

Federal loans that are eligible for inclusion in the PAYE calculation are any Direct loans plus certain types of Federal Family Education Loan (FFEL or Stafford) loans, although no Stafford loans can be repaid using PAYE.

There are other requirements discussed on the linked page (you must qualify as a new borrower beginning in 2007, not all Direct loans can be repaid under PAYE), but there is one outstanding benefit: if you do succeed in meeting the criteria, you will keep your eligibility even if your financial circumstances improve, eliminating your hardship.

However, if your choice lies between consolidating existing loans while paying more interest over time and falling behind in your individual loan payments, you should take the consolidation loan.

As you see, deciding whether consolidation is the right course for you depends not only on your current situation but also on the terms of the new loan. Department of Education (USDOE) has established a well-documented system of rules for federal student loan consolidation, and each private lender has its own guidelines for acceptable consolidation plans.

If you have both federal and private student loans, you will have to consolidate those types of loans separately. To guide you in making a decision about student loan consolidation, you can try a simple online assistant introduced by USDOE in the middle of 2012 to help students understand the basic principles of personal finance and apply that knowledge to their management of their student loans.

The assistant is called the Financial Awareness Counseling Tool (FACT), and it consists of a series of tutorials based on information from your own government loans, using that information to create a personalized analysis of your financial situation and offer appropriate advice.

The concept of student loan consolidation is simple: you apply for one large loan which will be used to pay off all your existing student loans.

That single loan will be easier to manage, because you’ll only make one monthly payment, and because it has a longer term than your old loans that payment will be smaller than the sum of your current payments.

However, debt consolidation is sometimes a tradeoff, an exchange of easier payment terms for a more expensive loan, since you may pay more interest on the same sum over a longer period of time.

The ideal consolidation loan would be one in which you took advantage of a financial trend to secure a lower interest rate, or were able to do so because of your excellent payment history, without extending the term of any existing loan.