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Why Is Consolidating Student Loans Good?

Daniel Morgan

Updated – Jan 16th 2021

why is consolidating student loans good


So you may you just finished celebrating the best 4 years of your life and one of the greatest achievements of your life by graduating with your college degree.Your life and future looks to be full sunshine and promise. what does the question Why is consolidating student loans good? have to do with that?

Well, lets continue…..

Then on one of those bright sunny days a visit to your mailbox ends with a nice little letter describing how for the next 30 years you will be paying back nearly a mortgage payment back for your student loans.

This is a common situation many of us finds ourselves in after graduating or moving on from secondary education.

So you may have heard from a friend or a former schoolmate that consolidating your student loans may be a great option for you to help with your student loans

Well today we are going to take a moment to deal with the question: “why is consolidating student loans good?”

So really, what makes consolidating my student loans a good move?

There are many benefits to consolidating your student loans. Many of these benefits can have a very good impact on your situation and maybe even your credit score.

Next we are going to go over some of the benefits that student loan consolidation can provide to a student loan borrower. And, provide more discussion on “why is consolidating student loans good.”



One monthly payment:

Student loan consolidation can offer alternative repayment options. In many cases these options can save you a lot of money on a monthly basis.

A federal consolidation has income driven options (Income based, Income Contingent, Pay As You Earn, Revised Pay As You Earn) for borrowers dealing with low income or on a fixed income.

Lower Monthly Payments:

Student loan consolidation can offer alternative repayment options. In many cases these options can save you a lot of money on a monthly basis. A federal consolidation has income driven options (Income based, Income Contingent, Pay As You Earn, Revised Pay As You Earn) for borrowers dealing with low income or on a fixed income.

Loan Forgiveness:

The federal government offers student loan forgiveness options for those that qualify for the program. A loan must be a federal loan to qualify, private student loans will not qualify for student loan forgiveness. Borrowers that work in public service or in non-profit can qualify for PSLF forgiveness if there student loan meets the program requirements.

Interest Rate Reductions:

Student loans can come with a fixed or variable interest rate. Depending on what type of student loan you have, your interest rate can be over 8% for just one loan. Parent PLUS loans generally have higher interests of about 8.25%. Still by student loan consolidation you can get a weighted average interest rate which is somewhat lower than a normal interest rate.

Also, some servicers will allow you to have a lower interest by you opting into a auto payment plan. Ask your servicer about these types of options.

Get out of default:

Student loan default can be a real serious matter if not addressed, Default happens when a borrower has when over 270 days without making a payment. Student loan default can lead to terrible penalties like, tax offsets, wage garnishments and bad credit.

Student loan consolidation can help a borrower get out of student loan default. When a defaulted loan in accepted into a consolidation program the defaulted loan is paid off by the consolidation. Once the loan has been paid off in full by consolidation the defaulted student loan is no longer in default and is paid off.

Is there any reason i should not consolidate my student loans?

Now that we have discussed some of the benefits to why you should consolidate your student loans, now we can talk a little bit about some of the aspects of student loan consolidation that important to know before making your decision to consolidate your student loans.

  • Loss of grace period: when a student graduates they have 6 months after their graduation date before they are required to start making payments. If a borrower decides to consolidate their student loans during this time frame they could lose the remaining time left on there grace period. This means once the consolidation is completed the borrower will have to start making their student loan payments.
  • Parent PLUS Loans: borrowers of Parent PLUS loans are at a disadvantage. These borrowers will not be able to use income driven repayment plans if they consolidate the Parent PLUS Loan
  • Private Student Loans: Private student loans do not share in the same rights as federal student loans. Therefore, private loans are not qualified for federal consolidation. However, there are private lenders and banks that will consolidate a private loans, generally your credit will determine what the private lender will offer you as far as a student loan consolidation
  • Active Student: if you are still in school you will not qualify for student loan consolidation. A borrower must be either, graduated, withdrawn, or attending less than half time

Need your monthly payments reduced?

Fine out if you can get total loan forgiveness!


Helpful Note:

Be sure to really make sure you understand the ins and outs when considering the consolidation of your federal student loans into a private consolidation.

Federal student loans consolidation and consolidation through a bank or private lender is not the same.

Federal student loans comes with certain rights and benefits that will be removed if the loans are consolidated into a private consolidation loan.

Final Take

Hopefully we have been able to help you to determine for yourself why consolidating student loans is good or at least worth taking a look into.

Ultimately you will have to decide if student loan consolidation is a good thing for your student loans.

Every person situation and needs are different. You may need a lower monthly payment or maybe you are a person that is interested in getting your loans forgiveness. Because, you work in the school system.

No matter what the agenda may be, consider all the information in this article to help you in your quest. Finding out why consolidating student loans is good.

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