Pros and cons of consolidating

Once you finish college, you are likely to look at all of your student loan payments and sigh: How are you supposed to keep all of them straight? This is when many people start weighing the pros and cons of consolidating student loans.

Among the inconveniences of student loans is that each loan that you receive for each school year is often considered a different loan — and it has to be repaid separately, with its own interest rate.

The biggest advantage of federal student loan consolidation is that your monthly cash flow improves immediately.

My monthly payment went from almost 0 a month to 2 a month.

That means that you have various loans, and all of them have a 10-year repayment schedule. I got a lower rate and a lower payment, since my total repayment term had been extended to 25 years.

My monthly payments, all added together, ended up being right around 0 a month. Consolidation has worked well for me, and it can work well for many students, as long as you understand the risks.

For the most part, student loan consolidation is a good move for many graduates.

Loan consolidation can also give you access to additional loan repayment plans and There is no application fee to consolidate your federal education loans into a Direct Consolidation Loan. Department of Education (ED) or ED’s consolidation loan servicers. Top A Direct Consolidation Loan has a fixed interest rate for the life of the loan.When you consolidate, and then make extra payments, you have the advantage of more efficiently paying down your student debt since more of your payment goes toward reducing the principal, rather than paying interest.Another consideration, though, is what you could earn in other ways.Some commenters on this blog described how they got an 8.25% interest rate (the highest possible rate for federal student loans) after consolidating their loans, and that high interest rate has made it very hard for them to make any significant progress in paying their loans off.Moreover, even if you wind up with One way to take the edge off the student loan consolidation is to make extra payments when you start earning more money.

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My rate was locked in during the summer of 2005, so I was lucky to get a very low rate.

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