If you are having a really hard time keeping up with all your college debt repayment, you might be looking into student loan consolidation as an easy repayment method.
However before you go to a debt consolidating company, you must first understand both the good and bad sides of this repayment option.
What are the benefits of combining your debts? If you are lucky, you can lock-in on a low rate that is fixed and won't be affected by economic changes.
Since your interest rate is lower, your repayment will then be less of a hassle making it easier for you to keep up with the payment schedule.
You lower your monthly dues by extending your repayment term.
In cases where your loan interest is being covered by the government, student loan consolidation will not affect this.
You can choose which debts to combine and which ones to pay individually.
In case your debt repayment has defaulted, combining them will result to a more affordable interest rate and repayment dues.
You can combine your debts with that of your partner's for easier repayment.
No credit checks are involved, no bank fees and no early repayment penalties to worry about.
And what about the bad points of combining your debts into one? If you have newer loans, you cannot have them combined with the older ones If you get your college debts consolidated, the 6 month grace period will be waived so you will need to start paying off what you owe immediately Since your interest rate is locked-in or fixed, you can't get it adjusted in case interest rates gets lowerWhen you combine all your debts, your repayment term is extended to accommodate a lower payment due and interest rate but then you will end up paying more than you actually owe in the long run.
Private student loan consolidation will lose you your borrower's benefits like cancellation options, forbearance options and forgiveness of debts.