When should you NOT consolidate your student loans? | 03.05.10
Nine times out of ten, you should consolidate your student loans. Student loan consolidation can give you a smaller monthly payment and, perhaps, a lower interest rate. What’s not to like? But for that potential tenth time, you should consider other avenues.
Here are three instances where you should NOT consolidate your student loans:
1. If you are close to paying off your student loans. If you believe you can reasonably pay off your federal and private student loans in just a couple of years, you are probably better off not consolidating. In that instance, consolidation will simply spread out your payments and make you pay more in interest over time.
2. If you are unfamiliar with your lender and its reputation. Check with your financial aid office for a list of lenders that can be trusted. You may also peruse the debt consolidation options here.
3. If your loans contain forgiveness options or discharge benefits. Some federal loans contain borrower benefits, such as forgiveness options. Perkins loans, for example, may forgive debt for full-time nurses or law enforcement officers. Attempting to qualify for those benefits after consolidation may be tricky.
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thanks for the information. Interest is really high these days!
great info
Important to get more information
I don't think any loan would consider the 3rd option "forgiveness options"
I didn't know about #3. I will consider that when consolidating.
I'm getting a better understanding.
THanks for the info!~
Great info. Very helpful. I will definitaly take all this into consideration when looking for a loan, if I get one.
good to know that i have this option.
Good information to people that are looking for really good loans.
This is misleading. Financially, it is usually only sensible to consolidate if you will be paying at or near your minimum payment. Regardless of whether you can pay off your loans in a couple years, if you can make payments above and beyond the minimum, you should look into lowering your payments on each loan to interest only payments (often allowed for a limited time), then pay as much as you can over that payment to your remaining loan with the highest interest rate.
An interest-only payment once your loan is in repayment is actually a terrible idea. You want to be paying down your principal as quickly as possible, because that is what your interest accrues from. If you have any extra money to put on your loan after monthly payments, it should always go directly down onto principal.
Very good to know information.
I had never heard of consolidating loans but it's good to know it's an option and when to and when not to do it.
Good Information. I'm sure this will be helpful this coming fall.
thanks for the inforamtion i am looking for a good loan
thanks for the information i am looking for a loan but i dont want to be in a big debt later in life thanks