Pros and Cons of College Loan Consolidation

In college loan consolidation, you can encounter some pros and cons.  Before going into it, you would have to do some serious thinking if consolidating your loans is right for you or not.  To help you with the process, here are some pros and cons of student loan consolidation.

But before that, why don’t you familiarize yourself with a brief overview on college loan consolidation.  At the end of every pros and cons, you will also be given a tip on how you can deal with it.

What is college loan consolidation?

With college loan consolidation, you will be able to bundle up all your eligible student loans from different lenders and combine it into a single repayment plan and one lender.  This will give you a lower interest rate, and therefore big savings.

Here are some pros and cons:

· Consolidation during grace period

You can get an even lower consolidation interest rate if you decide to consolidate your loans during the grace period (the 6-month time after you leave school before you start making payments).  However, by doing so, you will forfeit and in turn lose your remaining grace period and would have to start paying within 60 days.

To deal with this, you can apply for student loan consolidation during the later part of your grace period, maybe towards the end. 

· Repayment period extension

If you’re having a difficulty with coming up with the monthly payments on time, then consolidating your loans could be right for you.  This is because with it, you can extend your repayment period for up to 30 years, basing on your total education loan debt.  Because you stretch your payment over a longer time, your monthly payments will surely and dramatically decrease.  The bad thing is that stretching your payment will lead you to pay more interest over the life of your loans in the long run. 

What you can do is select the shortest repayment period possible that you can afford.  This will allow you to pay your debts quickly and save you on interest. 

· Single payment to one lender

This will really make your life simpler.  By paying only to one lender, it’s less hassling and less paperwork too.  But, it could also be wasteful especially if your current loan is providing you with benefits like loan cancellation and deferment eligibility.  In the end, it’s really up to you.

So decide whether the pros and cons of college loan consolidation outweighs another.  This will surely help in the decision making process.