The students have an option of consolidating their loans or converting multiple loans into one loan.

1. Student Debt Center
Is it Wise to Consolidate Student Loans!

2. Students busy with settling their careers post completion
of their courses should give first priority to the work
engagements. All personal and financial commitments
are shifted to the second place in their agenda at that
point of time. In such a situation if they are forced to
think of the multiple loans they have accrued to
complete the course of their dream, this would only add
to the stress levels of the student who is in anyways
under huge stress due to the competitive professional
world. Also, at times the students completely forget
about their multiple loan schedules and often end up
defaulting on their loans.

3. In order to avoid such a situation, the students have
an option of consolidating their loans or converting
multiple loans into one loan. Though this is easier
said than done, but this would not only reduce
confusion and ambiguity regarding multiple loans but
also make repayment efficient and timely. But before
taking a decision regarding consolidation, they
should know all about their loans and the advantages
and disadvantages of consolidation.

4. Complete Knowledge about Loans
The students should know the types of loans taken which
implies that they should be clear whether the loan taken is
from the Federal Government or the Private Lender. They
should also know about the interest rates at which the loans
have been taken since different interest rates exist at
different times. They should be aware of the interest type –
Fixed or Floating. Most importantly they should have a
complete grasp of the benefits, such as forgiveness benefit,
income related repayment benefit and other such benefits,
of each loan they have accrued.

5. Advantages of Consolidation
The most important advantage of a consolidated loan is a single,
convenient monthly payment. Also, most of the times, a
consolidation loan might provide a different repayment plan than
the existing loan. Such a repayment plan can reduce the payment
burden for the student at least in the short term because
generally the term of such repayments increases than the actual
loan repayment tenure. If chosen wisely, the consolidated loan
can have reduced rate of interest rate. The student should choose
a fixed interest rate for such consolidated loan and this rate would
be a weighted average of interest rates of the multiple loans a
student has accrued rounded off to one eighth of a percent. The
fixed rate of the consolidated loan would ensure a certain
payment each month thus reducing the uncertainty of payment
of multiple loans with variable interest rates.

6. Disadvantages of Consolidation
Consolidation of multiple loans needs to be done intelligently.
Incase if high interest rate loans are clubbed with low interest rate
on, the borrower would have to shell out a higher average rate of
loan which is not favorable. If the consolidation of loans is done at
a time when the interest rates are forecasted to fall down in the
near future, the borrower should consolidate intelligently to take
that benefit because once the consolidation is done, nothing
much can be done about the loans. Loans offering certain
benefits such as income related repayment or forgiveness, if
consolidated with those which does not have such benefits, the
borrower would nullify the benefits due to consolidation. Also, a
longer repayment schedule indicates an excess payment in the
longer run because of the extra interest that you need to pay for
the extra period of withholding the money.

7. Thus consolidation should be an option only for
those borrowers who wisely have a benefit in
consolidating. Alternatively, those borrowers
who have a risk of defaulting or not managing
their loans better should opt for consolidation of
loans.

8. Contact Us
Student Debt Center
18459 Pines Boulevard, Suite 532
Pembroke Pines, FL 33029
Call: 800-551-7187
Fax: (866)746-1986
Email: info@studentdebtcenter.org
Visit: http://studentdebtcenter.org