Is It Time For A Student Consolidation Loan?
What is more beautiful than not having the stress of college loans like some damoclean sword, waiting to descend upon one’s head? Well, I just finished my graduate degree program and as much as I want to be in denial and as much as I tried to put off the payment date, it is time to pay those college loans.
As a way of clearing the fog of denial, I decided to look at my options and thus I stumbled upon college loan consolidation. There was a time when student consolidation loans were all the rage, but it may actually not be the best option for those with loans from different sources.
What are Student Consolidation Loans?
In a student loan consolidation, the federal student loan is paid in full by the consolidating company and a new loan called the consolidation loan is created.
Why Consolidate Student Loans?
In the past student loans used to have variable rates, so it would make sense to consolidate at a lower fixed rate, so it
made sense to take out a student consolidation loan. However, since loans like the Stafford loan are fixed rate now, that may not be such a good idea.
Benefits of a Student Consolidation Loan
- One payment to one lender instead of to multiple lenders
- You may be able to make smaller payments
- There is no fee to consolidate your student loans
Disadvantages of a Student Consolidation Loan
- The debt repayment period may be extended
- The consolidated student loan rate may be higher then that of the individual loans
If you choose an expended payment plan, you may end up paying more over the long term.
Since I am in the early stage of repayment, I don’t expect to take out any student consolidation loans. However, late, this may or may not become a viable option.
Walk in Beauty
