Pros & Cons of Consolidating Student Loans

There are many factors to consider before consolidating your Federal student loans. For example, are you eligible to consolidate them? In order to be eligible for a consolidated student loan, "a borrower must be out of school or less than half time," according to the financial aid website of Loyola University in Chicago. While student loan consolidation may be an option for some, there are pros and cons.
  1. Pro: One Payment

    • Instead of making multiple payments to multiple lenders on your student loans, you make one payment to one lender.

    Pro: New Maturity Date

    • A consolidated loan is a new loan that will give you a new due date, thus giving you more time to pay off your loan.

    Pro: New Set of Deferments and Forbearances

    • You will receive a new 3-year limit on certain deferments and forbearances.

    Con: Increased Loan Interest

    • If you opt for an extended repayment plan, you will pay more interest over the life of the loan.

    Con: No Lower Rates

    • Because your loan is locked in at a fixed rate, you will not be able to obtain a lower rate.

    Con: Grace Period Lost

    • If you consolidate your loan during a grace period, you will lose the remainder of your grace period.

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