02.23.10 | Consolidate or Separate? That is the question.
Shakespeare aside, figuring out if student loan consolidation is right for you can be a tricky question. It largely depends on your income and loan interest rates, and isn’t always the right choice for every student.
Currently, both federal and private loans can be consolidated by their separate types. The point of it all is kind of like refinancing — you are trying to get a better interest rate on your loan and lower monthly payments, but also end up extending the repayment period (meaning you pay more overall.) Also, if most of your high interest loans are much smaller than the lower interest ones, consolidation may actually defeat the purpose of the cost savings.
The ideal situation and reason for consolidating loans is that they are large, have high interest, and you have a lot of trouble affording the monthly payments. Although having separate loans with different APRs and lenders may be annoying, a bad consolidation can end up costing you way more in the long run.
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February 23rd, 2010 | #