in what circumstances do you consolidate student loans?

Question

undergraduate student, senior

Answer 1

In addition to the answers already noted, here are some other reasons:

~ the interest rates on consolidated student loans is tax deductible, whihc may lower your "real" cost of borrowing

~ with consolidation, you may be able to extend your repayment period to give you more time to pay back your loans without fear of default or hurting your credit rating.

~ speaking of credit rating, by consolidating your student loans into a single loan, you can effectively decrease the number of creditors on your credit history, thereby enhancing your overall credit score.

Answer 2

There are several reasons you might would want to consolidate:

1. For simplicity. For example, you might have 5 different loans, which usually means you make 5 different payments a month. By consolidating, you end up with one big loan instead of 5 smaller ones, and you would only have to make one payment as opposed to 5.

2. To save on monthly payments. Most student loans (at least when I was in school) are paid back in 10 years. When you consolidate, you can opt to pay them back over a larger amount of time, say 15 years or more. This lowers your monthly payments, sometimes by as much as 40%. I had payments of 300 a month originally, but after consolidating, they went down to 160. Big difference.

3. To get a better interest rate. In some cases, by consolidating you get a better interest rate, which saves you money as well.

Answer 3

Agree with the other answers, and to add, unfortunately, student loan interest rates go WAY up on 6/30/06 thanks to Dubya!

Myself, I am a grad and need to consolidate my loans before the deadline! So I went on a google hunt (I mean search ;). But eventually, I did find a site that has rated a few student loan consolidators, and says they have checked them out. Here's the web page: http://lendersrated.com/studentloans.htm

Hope it helps you...
karateross

Answer 4

When each of your separate loans increases its interest rate.