Student Loan Consolidation – What’s Good, What’s Bad?

Student loan consolidation may just be the answer to your immediate financial problems especially if this difficulty is brought upon by the fact that you are barely keeping up with your college loan repayment.However, before you plunge in on this, it is important for you to know some basic information about consolidating debts that you may not have thought of yet. What are these?Basically, you need to know about the pros and cons of student loan consolidation.What is good about consolidating debt?1. There are no bank fees, credit checks or prepayment penalties to worry about.
2. You get to deal with only one company when you consolidate your loans
3. If you have a spouse already, you can consolidate your debts together for a lower monthly payment combined
4. For defaulted loans, payments and interest rates can become more affordable with consolidation
5. You have the freedom to choose whether to consolidate all or just some of your loans
6. If the government is paying for your loan interest, they will continue to do so even after your debts are already combined.
7. You can extend your repayment term and lower your monthly dues
8. You will have a lighter debt burden due to all your college loans combined into just one loan with lesser interest rate.
9. Your interest rate is fixed and won’t be affected even if rates go higherWhat about the cons of debt consolidation?1. You can’t consolidate new loans with an older loan.
2. Opting for student loan consolidation will require that you pay immediately even when your grace period is not yet up.
3. In case the rate gets lower, you can request for any payment rate adjustment. You have to stick with the fixed payment rate you have signed for during consolidation.
4. An extended payment term means higher repayment in the long run.
5. Private debt consolidations disqualify you from loan forgiveness, forbearance options and cancellation options.