Student loan consolidation is the act of putting various (or even one) loan into a new package. You get some special benefits, and you can structure the loan the way you want.
If you have multiple federal student loans with one or more lenders, you can
consolidate those loans into one. It is not necessary to have more than one type of
loan to apply for consolidation. Note that consolidation is not an option for
private student loans.
The main reasons to consider student loan consolidation are:
- Potential for lower monthly payments
- Fixed interest rate
- Only write one check for various loans
- Potentially flexible payments during hard times
Depending on your circumstances, these may or may not be that interesting to you. If you’re not worried about rising interest rates, for example, then you might not care about getting a fixed rate. Likewise, if you’re making your payments without any difficulty, you might have no need for lower payments.
Consolidation may be a wise choice if you are looking for a lower monthly payment and more time to pay the money back, but it may not be the best solution for you. Remember that there is no penalty for early repayment or prepayment on any federal student loan, so even if consolidation is a good option now, you can always pay the loan off earlier (and save interest) when you are able to afford higher payments. Consult your student loan lender for more information.
