Should I Consolidate my Student Loans?

If you are among the thousands of Americans who are considering consolidating their student loans, you may not know all of the pluses that a consolidation program can offer you. Here is an explanation of the primary advantages that a consolidation can bring to you:

1. Lowered interest rates: Companies will immediately lower your interest rate, typically about .25%, and then after 36 consecutive on-time payments they lower your interest rate by .75-1.0% or more. (Specific timelines and interest rates depend on the individual companies)

2. Fixed interest rates: Original student loans do not have a fixed interest rate. By consolidating your loans you lock in a specific interest rate that will never increase.

3. Extend the pay period: An original student loan is normally paid off in a 10 year time span. Consolidating allows the loan to be extended over a period of 15 years or more.

4. Lower monthly payments: Due to the fact that the life of the loan is extended over a longer period of time, this means that the monthly payments can be lowered. Typically, the payments can be lowered to 55-70% of the current monthly payment.

5. Prevents default: If you go default on your student loans, your collector is the United States government. This means that they can garnish wages, confiscate tax refunds, and withhold government benefits just as is the case with the IRS. Consolidating will help you to avoid these additions problems as it will make your debt more manageable on a monthly basis.

6. Eliminate stress: The stress of possibly going default on your loans can be overwhelming. By reorganizing your finances through consolidation, your can get payments that more adequately and comfortably fit you current budget.

Please remember to take advantage of the consolidation to help you eliminate your debt. A number of individuals do not take advantage of the lowered monthly payments in order to save funds and dig themselves out of debt. Instead, they proceed to accumulate other debts through credit cards and unrealistic home and car loans. Take the opportunity of consolidating your student loans as a starting point for developing responsible money management habits.

Scott Wallitsch is a consultant for DebtorSolution. To find out more about Student Loan Consolidation, visit our website or email us at