Although millions of borrowers decide to consolidate student loans, your situation might not make you a good candidate for the program. Many agree to consolidating their student loans because it will lower their monthly payment by extending the number of years the loan will be repaid. While early on in your professional career that may seem like a great idea, you might consider the following:
1. Student loan companies offer a variety of repayment options including consolidation. Prior to making a commitment to consolidate your loans, it is recommended that you speak to a financial aid advisor at your college or university. They will likely recommend that you contact your lender for a consultation on repayment options.
2. Student loan companies are better off placing you in the best repayment program possible. It benefits the lender as much as you to have you in the best possible repayment program.
3. While consolidation may seem like a wonderful idea early on, keep in mind that over the course of the extended repayment, you will be paying a considerable amount of additional interest on your loan. A student loan with an original repayment plan of 15 years that is extended to 30 years by consolidation will add an extra 15 years of interest.
Ask your lender about programs that offer "gradual repayment" options. These programs make payments on your loans smaller early on as you adjust to the professional arena. You should also ask about forbearance as well.
When considering a consolidation program, remember to ask your lender if there are any penalties for early repayment and which student loans are eligible to be consolidated under that plan.
College students are bombarded with offers to consolidate. This often creates confusion and panic as offers are filled with various interest rates and due dates. It is possible that you may receive multiple offers in the mail to consolidate. The best advice-start with your current lender. Odds are good that you will be offered a program that is every bit as good (or better) than anything in you receive in the mail. Finally, when considering a student loan consolidation program, if an offer is so far better than everyone else and looks too good to be true, trust your instincts and read the fine print.
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