Other Options

Loan Consolidation

If you’re making payments on multiple loans, you may have considered combining or consolidating your loans. This will simplify things. But, there is more to the story.

• Pros
  • Only make one monthly payment…it’s efficient.
  • Lower your monthly payment amount by extending the repayment period (up to 30 years).
  • Lock in a fixed interest rate for the entire repayment period of the loan.
• Cons
  • It could cost more. You’ll pay more interest over the life of your loan if the repayment period is extended. It’s always best to repay your loan as soon as you can so you pay less interest.
  • Loss of benefits, such as flexible repayment plans, deferment, forbearance, discharge, and forgiveness. Also, your original loan likely included a few perks (for example, interest rate discounts). These disappear when you consolidate.
  • Forfeit a portion of your grace period. If you consolidate before your grace period is over, repayment starts. Try to consolidate toward the end of your grace period.

You can access the Federal Direct Consolidation Loans website for more information.

Note that private education loans cannot be consolidated with a federal consolidation loan.