Do you have to send in payments to more than one lending institution to repay your student loans?
Do you have a huge monthly payment that you are scrambling to scrape up each month?
If any of the two scenarios above apply to you, then loan consolidation may be the right choice for you. Take a look at some of the pros and cons to see if you should consolidate.
Keeping Track Of One Loan May Be Easier
If you borrowed money from multiple lending institutions to pay your college tuition, you will have to make monthly payments to different lending institutions after you graduate. Keeping track of the repayment amount and date for each loan can be confusing and often results in missed payments and late fees. In this case, consolidation may be extremely beneficial.
When you consolidate your student loans, you have just have one payment to make. It can be so much easier to remember that one date and one payment amount every month. In addition, you may even be able to score a lower interest rate for one or two of your loans, making it cheaper for you overall.
Check Interest Rates Vs. Consolidation Fees
When you consolidate your loans, the new loan will have a new interest rate. Before you go ahead, take a look at the current lending interest rates. If there is a significant difference between the two, it may be worth your while to consolidate your loans. With a lower interest rate, not only will the monthly payment be lower, but you will also end up paying less in the long run. However, if the difference in rates is small, it may work out better not to make any changes because the fees associated with the consolidation will cancel all of the other benefits.
Consider The Short-Term Vs. Long-Term Benefits
High payments can be a struggle as you navigate the world of work, bills, and other responsibilities. Consolidation can help to reduce your monthly payment amounts. However, if you choose to go this route remember that although the payments are lower the repayment period is now longer, and this often means more paid in interest in the long run.
On the other hand, if you seem to be doing fine and are able to make your monthly payments on time, then it may be best to stick with the loan you have.
Is the Payoff In Sight?
Take a look at the balance of your loan. If the payoff date is in sight, within a year or so, maybe you should just stick with what you have. It seems to be working for you and consolidating may just add more time and/or more fees that you have to deal with. Stick it out for few more months and very soon you will paid off your entire student loan without wasting time going through any more unnecessary procedures.
Before making any decisions about consolidating, make sure to take a close look at the terms and conditions of your original loans. You want to make sure you aren’t stuck with fees you weren’t anticipating. If the end is near or you don’t feel like you are struggling leave them where they are. However, if you are struggling to stay organized or keep your head above water when it comes to bills, consolidating may offer you much-needed financial relief.
Use College Raptor to discover personalized college matches, cost estimates, acceptance odds, and potential financial aid for schools around the US—for FREE!