There are several scenarios in which consolidating your student loans makes a lot of sense and can be very beneficial for you.
Simplifying your finances: For some people who may have 6 or 7 student loans, being able to make a single monthly payment (rather than 7) might be very desirable. Consolidating your student loans isn’t always the best financial decision, but it’s usually the simplest.
Repayment plan eligibility: If you have older FFEL loans (as well as certain other types of federal student loans), you may not be eligible for certain desirable repayment plans. Many times if you choose to consolidate those loans with a Direct Consolidation Loan, you are then eligible for those plans. (See the table above for a complete description of which plans you may be eligible for with a Direct Consolidation Loan.)
Longer repayment period: For federal student loans, your repayment period could go from 10 years to 30 years when consolidating your student loans. This makes your payments a whole lot more affordable every month, but it does mean you will pay a whole lot more interest in the long run. For private student loans, you may be able to get a longer term by consolidating several private student loans, but the same downside remains – a much higher overall cost due to more interest being paid over the longer term.
Simplifying your finances: For some people who may have 6 or 7 student loans, being able to make a single monthly payment (rather than 7) might be very desirable. Consolidating your student loans isn’t always the best financial decision, but it’s usually the simplest.
Repayment plan eligibility: If you have older FFEL loans (as well as certain other types of federal student loans), you may not be eligible for certain desirable repayment plans. Many times if you choose to consolidate those loans with a Direct Consolidation Loan, you are then eligible for those plans. (See the table above for a complete description of which plans you may be eligible for with a Direct Consolidation Loan.)
Longer repayment period: For federal student loans, your repayment period could go from 10 years to 30 years when consolidating your student loans. This makes your payments a whole lot more affordable every month, but it does mean you will pay a whole lot more interest in the long run. For private student loans, you may be able to get a longer term by consolidating several private student loans, but the same downside remains – a much higher overall cost due to more interest being paid over the longer term.
