Consolidating Student Loans

Many students apply for and receive a new student loan every semester. If you graduate after attending school for eight semesters, you could have eight loans to repay.  That could require some juggling skills.  Each loan could have a different due date, interest rate, and repayment term. What a nightmare!

Combining these loans into a single debt is called consolidation.  Doing this may seem attractive. However, it might be more attractive if the consolidated loan offers you additional benefits.

Federal Student Loans

  • As with most decisions involving federal student loans, consolidating can come with landmines that can hurt you.
    As with most decisions involving federal student loans, consolidating can come with landmines that can hurt you.
  • Why?  Because most of the time, you may only consolidate your federal loans once.  In addition, consolidating these loans may have a financial cost.  Convenience may not be the most important reason to consolidate. After all, you can resolve an issue involving convenience by setting up automatic payments through your bank.
    Why? Because most of the time, you may only consolidate your federal loans once. In addition, consolidating these loans may have a financial cost. Convenience may not be the most important reason to consolidate. After all, you can resolve an issue involving convenience by setting up automatic payments through your bank.
  • If you need a loophole to resolve a delinquent or defaulted loan, it might be necessary to consolidate your federal loans. You might also wish to consolidate to lower your interest rate or change other terms of your loans.
    If you need a loophole to resolve a delinquent or defaulted loan, it might be necessary to consolidate your federal loans. You might also wish to consolidate to lower your interest rate or change other terms of your loans.

Private Student Loans

  • In contrast to consolidating federal loans, doing so with private student loans offers some significant benefits. But unfortunately, each bank has different procedures and criteria. That's why you may get better results by working with a lawyer experienced in working with the institution that holds your private student loans. For instance, if you have a good income and debt ratio, your lender might consent to lower your payments and interest rates. Or the bank might consolidate your loans on better terms if you have a good credit rating and a stable income.

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