combines all your eligible student loans into one new
loan with a fixed interest rate and may extend the repayment
term (or the amount of time you have to repay the loan).
This may also lower the monthly payment
and simplifies the repayment process because you only
have to make payments to one company.
A Consolidation Loan is designed to
help student and parent borrowers simplify loan repayment
by allowing the borrower to combine several types of
federal student loans with various repayment schedules
into one loan.
If you have more than one loan, a Consolidation
Loan simplifies the repayment process because you make
only one payment a month.
Also, the interest rate on the Consolidation
Loan might be lower than what you’re currently paying
on one or more of your loans.
And if you’re in default on a federal
student loan, you might be eligible for a Consolidation
Loan if certain conditions are met.
Loan consolidating can be very confusing.
Postcards that come in the mail saying “Consolidate
Now!” can make it seem like a brainless endeavor,
but what loan consolidation actually means to your finances
in the long run is a puzzle to many people.
Loan consolidation is when several
different loans are paid off by one vendor, who opens
a new loan. This new loan allows you to pay just one
bill instead of several different loans, possibly, from
several different lenders.
There are benefits to consolidating
debt, but there can be drawbacks, too. Depending on
your own situation, you will need to discover whether
consolidating loans or keeping loans separate is the
best way to go.
But don’t wait until sometime
down the road to consolidate. If you decide that consolidation
is the best option for you, do it now.