Consolidating student loans can offer repayment benefits for many graduates, but there are options when it comes to consolidation plans that may be available and many graduates are often prompted to compare the opportunities they may have to handle and repay their college loans. Understandably, many students who graduate with some form of debt related to college loans will typically have multiple loans, which will obviously lead to multiple payments and the likelihood that a student may be strained when it comes to meeting these monthly payment obligations.
For this reason, student loan consolidation plans may offer more affordability, but there are some individuals who feel that graduates must look at their overall situation to primarily make sure that consolidating is right for them and then look at what opportunities they may have. As an example, if a graduate has a mixture of federal student loans and private student loans, private loans cannot be consolidated under a federal student loan consolidation plan and if federal loans are grouped into a private student loan consolidation plan, they could be associated with a higher interest rate as a result.
An article on Forbes.com made mention that some students will simply not benefit from refinancing federal student loans in general as they carry fixed interest rates. The article quotes a publisher of Finaid.com who states, “there is no financial benefit to consolidating federal loans, other than having a single monthly payment and access to alternative repayment plan.” Obviously, if students are unable to meet monthly payments on multiple federal student loan debts, consolidating can be helpful as federal student loan consolidations may not only bring about lower monthly payment obligations but they can offer various repayment plans to bring monthly payment obligations even lower.
It’s true that federal student loan consolidation plans can also open the door to opportunities that may allow students to take advantage of income-based repayment programs, student loan forgiveness options, or forbearance if particular financial stresses have led to a situation where meeting a minimum monthly payment on a student loan consolidation loan is difficult.
However, as many students are currently in the process of applying for student financial aid, which will surely lead many to student loans, graduates who are attempting to find affordability in their student loan repayment obligations have been advised to simply run the numbers and make sure that consolidating can lead them more overall cost efficiency if they are looking to get out of debt at as low of a cost as possible, because a consolidation loan could result in these overall costs to be higher. It goes without saying though, students who are in a situation where they may miss student loan repayments, which would do damage to their credit score, may be in a better position to simply take higher costs and enter into a consolidation repayment plan because if their financial situation improves they can always begin paying more on their loan in the hopes of reducing the total may pay when interest is factored in. Yet again, the decision of consolidating student loan debt will fall on the shoulders of the graduate as their personal debt situation will differ from others and could lead to more affordability outside of consolidation.