You may end up paying more in total interest after you consolidate your student loan debts.You could lose some of the benefits from your subsidized student loans.Simply put, this is the process of combining your multiple student loans into a single, bigger loan, possibly with a new lender.
You can choose to consolidate your private loans into one loan as well.
Unlike federal loans, these loans are not managed by the government.
But in general, here are some of the benefits and potential drawbacks when considering student loan consolidation.
Hopefully, you tried to take advantage of financial aid in college — specifically, federal student loans — before turning to private loans, which often carry a higher interest rate and come with fewer borrower benefits.
You may also lose your ability to explore loan forgiveness options, where all or a portion of your loan debt can be erased in exchange for joining the military, working in certain fields, volunteering, or moving to a specific location.
For more information on student loan consolidation and to determine if this option is right for you, check out our student loan consolidation guide.There are both benefits and drawbacks to consolidating your loans, which we’ll discuss in this article.Choosing to consolidate your loans is an individual choice and the right decision will depend on the specifics of your loans — the types of loans, interest rates, balances, borrower benefits, and more — as well as your current financial situation.If you did, you may want to learn how to specifically consolidate these federal loans.The Direct Consolidation Loan allows you to consolidate multiple federal student loans into one.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.