Today we continue our series on Student Loans, written by Sader Law Firm attorney Megan Dennis.
PART 2: LOAN CONSOLIDATION
When a person first finishes school, one of the main topics of conversation amongst their peers will be the much dreaded student loan repayment. Some people will brag about the low interest rate they locked in by consolidating their student loans. Others will indicate that they opted to keep their loans “as is” and make the payments separately. So what exactly is consolidation? It is combining some or all of your student loans into one new loan. Only certain student loans are eligible for consolidation. Private student loans are not eligible for consolidation. For a complete list on what loans are eligible for consolidation, please visit the U.S. Department of Education’s website.
The pros of consolidation: It can lower monthly payments and can lock in a fixed interest rate.
The cons of consolidation: It can increase the duration of time you will have to make student loan payments, which can, in turn, increase the amount of interest that is paid.
It is important that before you consolidate, you take into consideration both the long-term and short-term effects of doing so.