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Is it a Good Idea to Consolidate Student Loans?

Those wondering whether or not it would be wise to consolidate student loans need to carefully research their options before make a decision. Consolidating student loans involves taking out a large loan to pay off several different smaller student loans. This process can simplify the process of paying off student loan debt.

However, it's important to carefully research any interest rates or other costs of consolidating to make sure that you won't pay more money back on consolidated loans than you would by simply continuing to pay your loans off individually.

Resource: How Long Does it Take to Pay Off College Loans?


You may have to meet certain eligibility requirements before you are able to consolidate your loans. Typically, you will have to be out of school before consolidating, or at least you must only be enrolled part time if you are still taking classes. You must be up to date on your payments, and you must have a history of making your payments on time. You also will typically need to have at least a certain amount in loans. To consolidate, you should owe at least $5,000 in student loan debt.

You won't likely be able to consolidate a private student loan debt with federal loans. Also, you cannot take out loans in another person's name. That means that- for example- it will not generally be possible for you to consolidate your student loans with those of your spouse. If loans were taken out to pay for your education in your parent's name, you won't be able to consolidate them with loans that you've taken out in your own name.


The major advantages of consolidating student loans include streamlining the payment process, getting more time to make repayments, lowering interest rates on your loans, and lowering the amount you have to pay every month. By consolidating, you can also change from variable loans to a fixed-rate loan. This means that you will know that the interest rate on your student loan cannot increase. Another possible advantage of consolidation includes being able to take advantage of an alternate payment program that can be adjusted to accommodate your financial situation. Furthermore, borrower benefits such as discounted rates for automatic payments might be offered on your consolidation loan.


If you put a lot of research into planning out your loan consolidation, you may be able to avoid some of the possible disadvantages. Disadvantages include paying out a greater amount of interest, paying back more money overall, having to make payment for a longer period of time, losing any borrower benefits that you've enjoyed previously, and having to pay certain penalties. Another possible drawback of consolidating your student loans is that you may lose grace periods that you could take advantage of with your original loans.

Making a decision on consolidating student loans should involve carefully examining your situation and the various consolidation loans that are available to you. The best decisions on whether or not you should consolidate student loans will not be the same for everyone, so you will have to put some effort into finding out what's best for your unique situation.

See also: Best Value Schools - 5 Key Factors You Need to Understand About College Loans

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