When Is Student Loan Consolidation A Good Idea?
/A student loan consolidation means combining all of your existing student loans into one lump payment. The lump payment can result in a lower interest rate and, therefore, a reduction in overall payments. Here are some things to review if you are considering student loan consolidation.
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Why should you consolidate your student loan?
Student loan consolidation is not for everyone, but it is worth considering. A student loan consolidation can make it easier for you to manage your debt because of the single payment, and the possibility of a reduced interest rate and lower monthly payment.
When is student loan consolidation a good idea?
If you are struggling with the monthly payments
Multiple loans at higher interest rates are overwhelming. Consolidation will combine your loans into one and generally, will result in a reduction in the monthly payment. However, keep in mind that this may extend the time it takes to pay off your loans.
If you have high-interest rates
Another pro of student loan consolidation is you may qualify for lower interest rates.
If you can afford higher monthly payments
If you can afford to make higher monthly payments on your student loans, consider consolidation first so that you can reduce the interest rate. By doing this you will be able to pay off your loans faster.
If you have a lot of loans to keep track of
One monthly payment is much easier to manage than multiple student loan payments. If you have multiple student loans with various due dates, consolidation will mean you only have to think about one payment due date each month.
Key Takeaways
If you are facing multiple loans and have a hard time paying all of them, then maybe you should consider a student loan consolidation. It is on a case-by-case basis, so be sure to do your research before committing to any type of loan consolidation.
Disclaimer: the content presented in this article is for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.
