Student loans are a great way to finance your education, but should you consolidate your student loans? The amount of debt that most students incur is considerable and paying it all back can be a daunting prospect, especially when you are just starting out on your career. Or worse still, you don't have a job when you graduate.
One possible way of making student loan repayments more manageable is student loan consolidation, which allows you to lower your monthly repayments and extend your loan over a longer period, usually up to 30 years..
Why should you consider consolidating your student loans?
If you consolidate your student loans, they are repaid by the lender and then your debt is lumped into a single loan, which means only one lender and one monthly repayment for you to worry about. In fact, you can reduce your payment by as much as 50% in some cases, which makes a big difference if you aren't in a high paying job when you finish your studies.
You won't be able to consolidate any private loans you have with your federal loans and parents are not permitted to consolidate their parent loans with those of their children.
The major drawback is that you will probably have to pay out more because you have extended the life of your loan. So it is important that you consider all the potential consequences of taking this step. Lower payments might sound good now, but do you still want to be paying off your student debts when your own children are preparing for college?
As with any type of loan, it pays to do your homework. Make sure you research all of the options available to you before deciding to consolidate your student loans, have a look at at the terms and conditions and the interest rates and be sure to do a loan comparison before you make your final decision.