Loan Consolidation Forum
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ellewoods123
- Posts: 245
- Joined: Thu Jan 02, 2014 4:55 pm
Loan Consolidation
Can anyone speak to pros/cons of this? From what I understand the interest rate is a weighted percentage of all your loans..so what are the drawbacks to doing this?
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hmlee
- Posts: 365
- Joined: Sat Dec 06, 2008 8:12 pm
Re: Loan Consolidation
It kind of depends on which loans you are trying to consolidate. These are the general pros and cons:
Pros:
-Reduces your number of servicers. Until I consolidated, between undergrad and law school debt, I had 8 different servicers. Even with auto-pay set up for most of them, that still meant 8 different websites to check in on if I ever needed a forbearance or deferment, as well as 8 different places to collect information from for tax purposes. After consolidation I'm down to two.
-Can alter your interest rate in a good direction, depending on what loans are consolidated
-Simpler process to get approved for IBR / PAYE / what have you
Cons:
-Can alter your interest rate in a bad direction, depending on what loans are consolidated
-May make you ineligible for certain special perks of various types of loans. This primarily applies to Stafford and Perkins loans, and not all of the privileges that come with them are applicable to law students.
At the end of the day, it comes down to looking at exactly what your situation is w/ regard to servicers, interest rates, and types of loans. There's quite a bit of good literature out there that goes into detail on the specifics of consolidating various loans that would be good to look at.
This: http://studentaid.ed.gov/repay-loans/consolidation is a good starting place.
Pros:
-Reduces your number of servicers. Until I consolidated, between undergrad and law school debt, I had 8 different servicers. Even with auto-pay set up for most of them, that still meant 8 different websites to check in on if I ever needed a forbearance or deferment, as well as 8 different places to collect information from for tax purposes. After consolidation I'm down to two.
-Can alter your interest rate in a good direction, depending on what loans are consolidated
-Simpler process to get approved for IBR / PAYE / what have you
Cons:
-Can alter your interest rate in a bad direction, depending on what loans are consolidated
-May make you ineligible for certain special perks of various types of loans. This primarily applies to Stafford and Perkins loans, and not all of the privileges that come with them are applicable to law students.
At the end of the day, it comes down to looking at exactly what your situation is w/ regard to servicers, interest rates, and types of loans. There's quite a bit of good literature out there that goes into detail on the specifics of consolidating various loans that would be good to look at.
This: http://studentaid.ed.gov/repay-loans/consolidation is a good starting place.
