Student Loan Consolidation Pros and Cons

With the availability of some of the cheapest interest rates in the past few years, more and more people are thinking about student loan consolidation to clear up their outstanding student loans. Nevertheless, it is essential to realize the overall significance of student loan consolidation. Given below are some of the advantages and disadvantages of student loan consolidation. They would help you solve any problems while making a decision whether you should go for consolidation of your student loans.

The Pros of Student Loan Consolidation

• When you have more than one student loan, all your loans can be consolidated into a single loan with a reduced interest rate. This minimizes your total debt burden and you don't need to write multiple checks every month.
• You can lock in your interest rate in order to ensure that it does not rise even if the prime rate goes up.
• If the U.S. Government has been making payments for the interest on your student loans, they would keep on doing this even subsequent to your consolidation.
• You can reduce your monthly payments by stretching your repayment term.
• If your student loan burden is excessive and you are a defaulter, loan consolidation would reduce your monthly payment sufficiently in order to make the repayment reasonable and convenient.
• All your student loans can be consolidated or you can opt for consolidating some of your loans. You can consolidate only one loan. The preference is yours.
• If you opt to consolidate your student loans along with your spouse, your monthly payment would definitely be less than what you and your spouse have been paying individually.
• These programs are not similar to other consumer loan products since there are no prepayment penalties, credit checks or bank charges.
• When you consolidate a number of student loans, you would land up with one organization or company to call for queries, feedbacks or grievances regarding your loans.

The Cons of Student Loan Consolidation

• If you opt for consolidating your student loans at the time of your grace period, your grace period gets void and repayment starts immediately.
• You can just consolidate your student loans on one occasion.
• If you decide to stretch out your repayment term, the total cost of your student loan increases.
• You would most probably lose clemency, postponement, termination and forbearance options.
• When you consolidate your student loans along with your spouse, both you and your spouse would be liable to pay off the loan if you land up in a divorce.
• If you choose to return to school following the consolidation of your student loans and take another loan under a federally supported student loan program, you can't consolidate this new loan along with your earlier loans.

Contributed by Debt Community Member.