When Is Student Loan Consolidation a Good Idea?

When you apply for a student loan, sooner or later, it will knock on your door asking for payment, and when this happens, should you consider student loan consolidation? A student loan consolidation means combining all your existing loans into one whole payment. This means you get to enjoy a lower interest rate and a shorter-term payment. But should a debtor go with this kind of plan? 

Why should you consolidate your student loan

Although student loan consolidation is not for everyone. There are still factors you should consider. A student loan consolidation will make it easier for you to manage your debt since you will only need to pay everything in one go. It will also make you eligible to get a lower monthly payment since the terms are prolonged. 

When is student loan consolidation a good idea

Ideally, you should apply for a student loan consolidation only if you have similar situations like these ones:

• Your monthly payments are too high 

Multiple loans result in several monthly payments which are expensive. But by consolidating it, you get to have a longer payable term resulting in lower monthly payments. The usual timeframe is within 30 years.

• Your interest rates are too high

Another pro of student loan consolidation is you get to have short interest rates. If you currently have a high-interest rate, this will just put you in debt more. Maybe it is time to consider consolidating your loans. 

• You can afford higher monthly payments

The monthly payments on a student loan consolidation depend on the amount and term length. But do not expect that it will be really low since everything is lump sum. If you have extra cash you can afford paying a higher monthly fee. The silver lining in this is, you get to pay it off earlier. 

• You have many loans to keep track of

In student loan consolidation, you can only pay the totality if you have federal student loans. If you do have multiple, the time comes that it will be difficult to track each one of them. To better get a grasp of what you are paying, a student loan consolidation is a good idea. 

Key Takeaways

Personally, if you are facing multiple loans and have a hard time paying all of them, then maybe you should consider a student loan consolidation. It is on a case-to-case basis but it will help you in the long run. The downfall of this though is that you get to prolong the years of payment. For example, you may be working but you are still paying for your college expenses and student loans. 

You can only consolidate once in your life. The moment you agree to the terms and conditions, there is no turning back. Instead, work, hustle and pay off your debt as soon as possible. It might be tiring but you will get there. Regardless of how fast you can pay off your debt, what matters is that you get rid of them and pay it legally.

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