Student Consolidation Loans: The pros and cons

You must have heard of student consolidation loans before. Wonder what it’s all about? From your federal student loans to your private student loans, the option to combine your loans into one varies from one lender to another. Many people have chosen this option since it makes payments hassle-free, without having to track interest rates and due dates on each student loan. Because you are on student consolidation loans, you will not pay any fee to do it. Anyone who asks you of a fee is DEFINITELY a scam!

Student Consolidation Loans: Is It Right For You?

Now that you know you can mix all of your student loans into one, what’s in it for you? Your student consolidation loans is a strategy that helps you manage your debts, and you need to plan it carefully. Consider these before you sign up for that deal:

PROS:

1. When you do a student consolidation loans, you get to enjoy lower or reduced monthly payments. This helps you unburden some of your loads, making you write lesser pay checks each month. Federal student loan consolidation can even cut your monthly payments – in half.

2. You get lower interest rate that is locked, even when current rates soar.

3. You can extend your repayment period up to 30 years, depending on the type of loans you have.

4. Tired of non-stop calls from your creditors? Consolidating your loans give you that debt relief, saving you from all the hassles of filing paperworks and contracts.

5. You get the flexibility of choosing which loans to combine, helping you manage your debts better.

6. In a hurry to pay quick? Do it anytime and have a peace of mind with zero prepayment penalty.

CONS:

1. Although your loan term is extended to the maximum years you can take, this also means higher costs in your total interest rate. It can double or triple, the longer your loan term is.

2. You may be lured into a false sense of security where you will be tempted to spend more, leaving you with more unpaid bills on your doorsteps.

3. Nothing in life comes for free and doing student consolidation loans come with the sacrifice of losing your right to deferment, forbearance, grace period, or even loan forgiveness.

4. You only get one chance to consolidate your student loans and you may not do it twice in your lifetime. Be Wise!

5. You may run the risk of having a poor credit history if you miss a payment or two.

6. If you consolidate a loan with your spouse, you will both be held responsible for repayments – even if you divorce.

Which Types of Loans Can Be Consolidated?

Though it’s rare to find lenders who offer this option to private student loans, you may actually consolidate any of these federal student loans: Federal Stafford, Federal Direct Stafford loans ( subsidized or not ), Federal PLUS, Federal Direct PLUS loans, Federal Consolidation, Federal Direct Consolidation loans, Federal Supplemental Loans for students, Federal Perkins loans, Federal Nursing Student Loans, Health Professions Student Loans, and HEAL loans. ( Source: United Student Aid Funds, Inc. )

Student consolidation loans may give you that perfect chance to manage your finances better, where you can be your own boss and pay at your own good time. If you hate all those disadvantages mentioned above, you can always ask for flexible repayment schedules. If your loans are handled by the same lender, why not ask your bills to be combined into one? Whether you mix loans or not, you still have to pay them all in the end. Be Smart with Your Money!

READINGS:

http://www.finaid.org/loans/consolidation.phtml

http://www.studentloanconsolidation.ws/student-loan-consolidation-pros-and-cons.htm

http://student-loans.suite101.com/article.cfm/student_debt_consolidation_loans_pros_cons

http://www.usafunds.org/borrowers/loan_consolidation/index.htm