What are the pros and cons of consolidating a federal student loan?

Answer 1

Hi there,

There are many many pro's and not to many con's when it comes to federal loan consolidation..

Ill start with the obvious..

This is a FREE, NO COST program offered by the government (how often do you see the govt. giving something for free??)

There are no penalties and it is risk free..

Here is the thing.. Any loans taken out prior to July 1st 2006 are variable interest rates..

What this means is that every time rates rise, your payments and interest rises on your loans.. VERY BAD!!

By consolidating , you get a FIXED INTEREST RATE... You no longer have to worry about your rates rising for you... If that there alone isnt enough of a reason, there's many more..

Think abou this, when you go into repayment, and have to start paying back loans, do you really wnat to have to write and send a seperate check to each seperate loan company? They typical college student has around 8-10 loans with different lenders..

This means 8-1o checks, envelopes, stamps, etc each and every month to your lenders... Thats to much work..

BNy consolidating you have 1 LOAN, 1 LENDER, ans most importantly, 1 PAYMENT!

The biggest thing is that the 1 Payment is usually hundreds of dollars less then what you would have been payin gif you didnt consolidate your loans...

The thing about consilidation is that the government realizes that its hard for students to manage and maintain their debt after graduating.. Alot of kids have a very hard time not missing payemnts and destroying credit..

The government wants you to get out of college, get a job, and become a big factor in the economy... If you get out of college with to much debt, and a high payemtn you cant handle, then you will neeb a negative to economy...

This is why the government offers this program... Now this is a key thing to note, there are many student loan lenders, but we all have the same program to work with,..

The department of education (government) administers every single student loan lender in America...

Each induviduall lender had tho follow the same exact guidelines to consolidate student loans..

My point is that it doesnt matter which student loan lender you choose.. The only differences between lenders are the rate discounts offered..

Yet again though, the department of education chooses ALL RATE DISCOUNTS...

Currently the government only offers 3 rate discounts.. Most lenders (sallie mae, nelnet, student aid lending) choose to only give 1 or 2 of the rate discounts (because they lose $$ by giving)

My company is a little different.. To set ourselves aside from the rest, we offer ALL 3 RATE DISCOUNTS TO CLIENTS..

It actually adds up to 1.85% OFF YOUR RATE FOR CONSOLIDATING...

Other lenders will only offer yo to 1-1.25% off...

I am a licensed student loan advisor with Student Aid Lending, we are a nationwide title IV lender administered by the Department of Education... I would be happy to assist you with the consolidation process..

Take a look at my yahoo 360 profile.. There is alot of helpful information there for anyone to view.. You can also find the direct link to my website..

http://360.yahoo.com/my_profile-hluduhmi...

It is actually a VERY SIMPLE process, it can be completed in 10 minutes over the phone and internet...

Feel free to call or email me at any time.. Im available at all tiem to answer any questions or concerns you may have..

I hope this helps!

Jason Fry
Student Aid Lending
1-800-964-0642 ext 114
[e-mail]

Answer 2

Pros: you get one bill instead of multiple bills, you can lock in the interest rate (on Stafford loans), you may be able to reduce your interest rate, you can extend your repayment term up to 30 yrs (depending on your loan amount) so you have the cushion of a lower monthly payment.

Cons: Once you consolidate, you can't change lenders unless you have an additional loan to add, if you choose an extended repayment term and make only the minimum payments each month, you will end up paying more interest over the life of the loan.

Do your research and stick with the larger lenders out there. If you've had good service from one of the companies you're already working with, you might want to consolidate with them.