Pros and cons of consolidating student loans

Many students graduate with more than one student loan, and some graduate with as many as a dozen or more.If you currently have multiple student loans, you could benefit from a consolidation loan on your student debt.You may be able to extend your repayment terms, pay a lower average interest rate, reduce your monthly payment amount, fix your interest rate or simply benefit from having a singular, simplified and streamlined monthly payment amount.However, loan consolidation is not always the answer.

Not all student loan debts can be consolidated, although most federal loans can.When I finished my graduate degree, I had five different student loans for attendance at two different universities, with various interest rates.On top of that, most federal student loans have 10-year repayment terms, starting from six months after you graduate from college.But, as Mark Kantrowitz warns on USA TODAY, “variable rates have nowhere to go but up.” If you sign up for that low, low rate now, you risk committing yourself to rising rates for years to come. Typical student loan repayment terms range from 5 to 20 years.By extending the repayment term, you can significantly reduce the amount of money you’re required to pay each month.That means that you have various loans, and all of them have a 10-year repayment schedule. I got a lower rate and a lower payment, since my total repayment term had been extended to 25 years.My monthly payments, all added together, ended up being right around 0 a month. Consolidation has worked well for me, and it can work well for many students, as long as you understand the risks.Much more affordable for the recent graduate trying to make ends meet.Not only do you have a smaller payment, but your interest rate is locked in.You may have been wondering, “Should I consolidate my student loans? Here are a few of the benefits of consolidating your loans. This If rates have dropped since you originally borrowed your loans, or if your financial situation and credit score have improved, lowering your interest rate could save you a decent chunk of change — and may also allow you to pay your loans off faster.Change your variable interest rate loan to a fixed-rate loan.