Federal and private student loans help millions to pay for post-secondary training needed in today's job market. Although loan payments can strain graduate budgets, they can also establish a good credit record that pays off in low rates on loans for major purchases. In 2008, 67 percent of graduates left school with a student loan, averaging $23,200 per student.
Federal Loans
Monthly payment history for subsidized and unsubsidized federal student loans is reported on your individual credit reports with Equifax, Experian and Transunion, the three major credit reporting bureaus. Federal student loan borrowers may receive deferment or forbearance periods under certain circumstances and these are also noted on credit reports. Each student loan received will be reported separately unless you apply to have them consolidated with Federal Direct Loan servicing or another loan service provider.
Private Loans
Private loan repayment history is also reported to the three credit bureaus. If you had a cosigner for the loans then your payment history will show on their credit reports as well. Good payment history is a plus for you and your cosigner but keep in mind that spotty payment history will reflect negatively on your cosigner's credit reports as well.
Consolidation
Multiple loans of any kind in your credit reports can make you look like you're over-extended. A consolidated student loan looks better on your credit reports and has the added benefit of lowering the amount that you have to pay out each month. Most federal subsidized and unsubsidized student loans can be consolidated into one direct consolidation loan. As a result of the U.S. banking crisis, private consolidation loans are harder to find in 2010, but like federal consolidation loans, private loans also bundle multiple loans into one to make them more manageable for borrowers.
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