Debt Consolidation Can Help Those Burdened By Student Loans


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Debt consolidation isn't a term you hear all that often outside of financial circles. After all, why would a young student have to worry about lumping their debt together? For the student with thousands of dollars in debt across different loans, debt consolidation may just be the way to go.

As students graduate from college, they're more than likely to be looking for ways to reduce their debt or their payments. One way to do that is debt consolidation. Instead of paying on multiple loans, the student only has to pay for one loan. This means lower monthly payments, but it's not all sunshine and rainbows. Here's a breakdown of the pros and cons from American Education Services.


  • Lower monthly payments
  • One bill, one lender
  • No prepayment penalties
  • A fixed interest rate
  • No limit to the number of loans that may be consolidated
  • No required minimum balance per federal rules
  • Cons:

  • A longer repayment period
  • More interest to pay back (calculated as the weighted average of all loans and rounded up to the nearest 1/8 of 1%)
  • Possible loss of current loan incentives
  • Loss of deferment subsidy on Perkins loans
  • In essence, debt consolidation is all about looking at your current situation and deciding whether or not more interest is worth lower monthly payments. It shouldn't be that big of a deal, however, as federal loans are still forgiven after 10 to 15 years of repayment. If lower payments will help you out now, debt consolidation may just be the way to go.

    Here's a better look at some benefits to consolidation:

    Whether or not you consolidate your debt is up to you. It might just be worth a shot, however, if it can net you lower payments.

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