Monday, January 16, 2012


If you consolidate your student loans together, it's very similar to consolidating other loans together: taking more than one loan and combining them. There are a few good reasons to consolidate, such as if you have to make more than one payment to different lenders/servicers. Anyone who falls in this category is a good candidate for a consolidation. It's much easier to make one payment for all your loans than three payments because it's easy for one of your loans to fall between the cracks.

There are a few things to consider if you're interested in consolidating. Firstly, you have to be approved for your consolidation. Now, the Direct Loan program is the only program consolidating federal student loans, so they will have to approve you. Secondly, your interest rate will change. Because you are going from several loans with differing interest rates into one loan with one rate, an average rate of your existing interest rates will be created. Thirdly, your monthly payment will likely decrease. If you have three payments of $50, then you will be paying a total of $150 plus interest. If you consolidate, your payment may drop to $100. If that's the case, then you'll be saving yourself $50 a month. Fourthly, the length of your loan might change, and you may end up paying more in the end due to the change of interest.

Usually, there are three factors that go into deciding whether you want to consolidate or not:
  1. Do I want a lower monthly payment now
  2. Am I willing to owe more over the life of the loan
  3. Should I combine the loans to make them easier to handle
These are questions that you should think about and discuss with your servicers/lenders. Also, if you have questions, you can research at

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