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Should You Consolidate Your Student Loans?

Are you making separate student loan payments each month on student loans? You may want to consider consolidating your student loans. Student loan consolidation and refinancing can help relieve some of the pain caused by multiple interest payments.

3 min readDec 11, 2020


Student loans are tough these days. The most recent student loan debt statistics show 71% of college graduates are graduating with some form of debt. 7 out of 10. Crazy! What’s more, some borrowers are stuck with high-interest rates as well as multiple monthly payments from several different student loans.

If you find that you’re stuck with multiple monthly student loan payments at high interest, then student loan consolidation could be a potential solution to help you lower some of your interest rates. If you have great credit and high income, then there’s a chance that you can consolidate and refinance your student loans for a better repayment outlook.

The idea of consolidating is an interesting topic in general. Before you consolidate any of your student loans, let's look at both sides of the table. You should know the advantages and disadvantages before deciding on whether or not you should consolidate your student loans.

Advantages of Student Loan Consolidation

Besides single monthly payments, although very convenient, a consolidation loan may bring a few additional perks to student loan repayment. The Department of Education’s government-backed student loans offer a couple of alternative repayment options including the popular income-based repayment plan. However, non-federal consolidation loans tend to offer an even wider variety of repayment options to borrowers aimed to fit many lifestyles.

In contrast to standard repayment plans, consolidation loans may have lower monthly payments available. This is often the case because consolidation loans typically schedule borrowers to repay their loans in 10–30 years. Most standard repayment plans have short repayment periods of only 10 years.

More importantly, the overall interest rate of your student loans in most cases will be lower when you choose consolidation. Most private lenders allow borrowers to refinance their loans as they consolidate. Refinancing is the process of lowering the interest rate on the loan. Many lenders offer rates as low as 3% APR. If you can consolidate and save an average of 2% on your loans you could save thousands over the course of the loan.

Companies like LendKey, a network of over 175 not-for-profit credit union lenders have great options. Their network of credit unions use common underwriting and pricing to provide members with affordable loan programs. LendKey offers rates as low as 1.97%.

Or SoFi, a leader in marketplace lending and the largest provider of student loan refinancing. SoFi helps ambitious professionals accelerate their success with student loan refinancing. Their nontraditional underwriting approach takes into account merit and employment history among other factors to provide unique financial and investment products. SoFi offers rates as low as 3.21%.

Disadvantages of Consolidation

One of the largest concerns with student loan consolidation is it might in some cases increase your total loan cost. This fact is especially true if you choose to extend your repayment terms.

Also, if you happen to consolidate during times of falling interest rates, you may actually get locked into a higher interest compared to one you could secure down the road. The interest rate prediction game is a tough one.

Also, some loans may have extra perks. Some lenders including the Federal Government may throw in incentives that can help lower the total cost of the loan. These incentives usually require on-time payments and scheduling.

The Final Thought

Student loan consolidation is a great option if used correctly. Many borrowers may have the ability to lower their monthly payments through a lower interest rate and longer-term length. But before jumping to consolidation we strongly suggest looking at any incentives you may have left on your current loans.

This article originally appeared on LendEDU.

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