Many people that graduate from a college or university often have some student loan debt they must deal with and many turn to a student loan consolidation for help with their college debt. While some of the more common student loans and consolidations come from the federal government, not everyone has a federal student loan but there may be benefits to private student loan consolidation.
Private student loan consolidation works similarly to federal student loan consolidation in that a college graduate is able to group all of their student debt into one place, which typically makes it easier to manage.
A big difference is that federal student loans often come with a lower interest rate, and since private student loans can’t be consolidated with federal loans, the graduate’s credit score is going to be taken into account when it comes to private student loan consolidation.
Getting a student loan consolidation is something a few financial advisors warn against as a consolidation can cost you more over the long run. In truth, if you have private student loans and you’re able to pay on the while keeping them separate you may fair better than if you consolidate them. Even if you are able to get a private student loan consolidation at a low interest rate you are going to have a larger amount of money on which interest can build, so this option could be costlier.
However, if you have a good credit score and you simply feel that keeping your student loans separate will cause you trouble, then you may benefit from consolidating you private student loans. It would be to your advantage to pay off that consolidation as soon as possible to avoid paying more in interest, so you might want to look at the length of the repayment period if you consolidate.
Taking your financial situation into account and how much it will cost you to repay your student loans separately versus if you consolidate them is going to be the only way to truly see which way is going to be in your best financial interest. What you do after you have this information, however, is going to be up to you.