Is Student Loan Consolidation Worth It?

Share this:

Student loan consolidation has become a popular choice for student loan borrowers. There’s no denying that college isn’t cheap. You’ve got tuition, books, housing, and food to think about. As a result, it’s common for most students to take out student loans—some have more than one loan from different lenders.

Student loan consolidation is a process that allows borrowers to bundle together all of their federal loans into one loan they will be responsible for paying back.

But, is student loan consolidation worth it? Student loans affect thousands of people across the country. Sure, if you have a degree you have a better chance at getting a job and making more money now.

However, even with a degree, you may still be struggling to pay off these loans long after college is over. Consolidating your student loans can be a smart financial move, but it’s not a decision to be taken lightly.

To save you the headache and make it an easy process, please read on. Below are answers to questions you might have about consolidating your student loans.

How do I know if I should consolidate my student loans?

The decision to consolidate your student loans depends on multiple factors like rate of interest, monthly payments, and other debt repayments. Consolidating your student loans that are at a high rate of interest may lower the overall repayment amount.

Student loans are only supposed to be taken for education so that you can get a better job. Consolidation of all your student loans may make sense when you cannot find any other way to pay off the debt.

Also, if the education is long enough ago that you have no realistic hope of trying to find a higher paying job large enough to take care of all your economic problems, then this could be a solution.

Does student loan consolidation lower payments?

Yes. Consolidating multiple student loans into one loan will usually lower your monthly payment.

By transferring your separate loans, you’ve removed some fees smaller loans typically cost you and have increased your total loan term.

The longer-term of the new loan allows you to develop a new, more stable student loan repayment plan.

The lower payment variability means that the new loan is less likely to be affected by changes in interest rates. There are typically fewer rate adjustments overtime on longer loan terms––the result of which is lower payments overall.

Consolidating your student loans will make payments more manageable and affordable.

Does student loan consolidation remove late payments?

No. Late payment information on your credit report will not be erased in the process of consolidating your student loan. It is common for borrowers to still have some late payments showing on their credit report after a consolidation.

Late payments on any loans consolidated into the Direct Consolidation Loan will remain on your credit reports, but will not adversely affect your credit scores because they carry less weight.

However, you can be proactive and work with the lenders to have late payments removed on a case-by-case basis.

Can I have my student loan consolidated while in school?

Yes. Many borrowers find that they can lower their monthly payments by consolidating their student loans while they are still in school.

However, this is only applicable to student loans gotten from the federal. Private lenders typically do not allow consolidation until you have graduated from college and are working full time at an accredited job.

So it depends on whether the loans are from a private or federal loan program. Also, if you consolidate your loans while still in school, your grace period will end immediately after graduation and repayment begin immediately.

Consolidating with the government more than once, is it possible?

Technically, you can’t go back and consolidate. Generally, a consolidation loan is not a way to get a new loan but rather to combine multiple federal student loans or private loans into one for easier management and payment.

At the start of your repayment period, any loans that are included on your consolidation loan will begin to be repaid along with interest.

However, you may be able to consolidate again and potentially qualify for public service forgiveness. This is only applicable If you are in default on the Federal Family Education Loan Program (FFEL) consolidation loan, and the loans are not included in your first consolidation.

Are student loans forgiven after 10 years?

If you have a federal direct loan and are working toward loan forgiveness under the Public Service Loan Forgiveness Program (PSLF). Also, you must be making payments under an income-driven repayment plan.

With that, you will be able to have your remaining balance forgiven after 10 years instead of 20 years or 25 years. Typically, you’ll have to make 10 years of qualifying payments before any remaining balance on your loan is forgiven.

However, for private student loans, forgiveness is not guaranteed and can only be granted by the lender.

Is there any difference between student loan consolidation and student loan refinance?

Student loan consolidation and student loan refinancing are both solutions that can help you pay your student loans, but they are different.

Student loan consolidation is when you commit all your outstanding student loans to one lender. In this scenario, all of your old loans become due to the lender that you consolidate with.

Student loan refinancing is a process of getting a new lower interest rate loan to pay off the current higher interest rate loans that you may have. Your old loans are not actually combined into one new loan.

Is it only student loans that can be consolidated?

Your consolidation loan can include any combination of undergraduate, graduate, or professional student loans, credit card debt, and mortgages that you currently have.

Lenders are increasingly offering a range of loans, including credit card debt, some student loans, and even mortgages in one lender-issued loan package.

So if you are seeking a loan to consolidate your borrowing—whether for school, home improvements, or other purposes—you may be able to reduce the interest rate you currently pay on all your loans while simplifying your payments.

When is the best time to consolidate student loan?

The best time to consolidate student loans is when a borrower has a high-interest rate that significantly affects their monthly payment.

Consolidating never hurts, because the borrower is either going to pay off their credit card and free up that money, or they will pay down the student loan.

However, there are many variables that go into the best time to consolidate student loans. What is best for you depends on a number of factors. Such as how much you owe, where your loans are, and whether you qualify for loan forgiveness. Generally, it’s advisable to seek expert advice.

Are there any drawbacks to student loan consolidation?

Sure. Student loan consolidation is a great benefit for students who are looking to complete their education or professional development programs.

However, there are drawbacks to obtaining a student loan consolidation. These drawbacks include changes in repayment term length. It lengthens the payment of your loans.

Another drawback is that the interest rate on most new loans is higher than the interest rate on the original loans.


Is student loan consolidation worth it? Yes. Consolidation allows you to combine your payments into a single monthly payment and extend repayment over the shortest term possible.

No matter how big or small your student loans are, consolidating them can make managing them a lot easier.

The result is a lower, more affordable monthly payment that might actually save you money if your loans were at high-interest rates. Best of all, consolidation does not include any additional fees or penalties!