Student loan consolidation options can be available to specific students through either a federal consolidation plan, from a private student loan consolidation, or even private personal loan, but the benefits that these particular types of loans offer will usually differ and require the attention of a particular student who feels that college loan consolidation is in their best financial interest. There are cases where many financial advisors and financial aid counselors may dissuade graduates from consolidating their debt, as the type of student loans that an individual has and the amount they owe will all factor into whether consolidating will be financially beneficial or if it will cause overall costs to increase.
First, the benefits of student loan consolidation are quite apparent as it can lead to lower overall monthly payments that a student must meet when they are in repayment. When an individual has multiple student loans for a total sum that is quite sizable, this can create financial difficulties since these graduates will be paying on various loans and combating more than one interest rate, so consolidation is often seen as the optimal alternative since it can lower the monthly payment amount that is required and lead to a graduate only having to combat one interest rate. Also, some students have consolidated their debts and gotten a lower monthly payment obligation as a result, but have paid as much as they can beyond this minimum monthly requirement to not only reap the benefits of a consolidation loan but erased their debt faster and at a lower overall cost.
However, there are certain types of loans, like private and federal loans that will not consolidate together under a federal consolidation plan, as an example, so this is one area where students must research their particular loan situation to see if consolidation is even an option for them under a federal plan. Federal student loan consolidation plans usually bring about not only affordable interest rates and payment options, but there can be a forbearance plan offered through a student loan consolidation option or even an income-based repayment program that will only require a student to meet their monthly payment obligation to an extent that is only a small percentage of their monthly income.
Yet, private student loan consolidation plans can also be beneficial for certain graduates, if they are in a financial position to consolidate various debts that may either not be grouped together under a federal plan or may be consolidated at a lower rate than a federal student loan consolidation program may offer. Usually, federal consolidation options are quite affordable and can come with low, fixed interest rates, but there are some lenders that may offer a private consolidation loan at a low, and even fixed interest rate, that could be more affordable for particular graduates.
In these cases though, students must look at not only the interest rate and timeframe of a consolidation repayment plan, but also terms and fees that may be levied against an individual, particularly in a private student loan consolidation option. Some students will opt for a federal consolidation loan due to the fixed rates that are usually offered, but again, some private lenders may offer a more affordable consolidation opportunity. Yet reading the terms and conditions of a particular private student loan consolidation plan will be necessary so that a borrower may avoid any sudden rate increases or excessive fees that could cause their overall repayment costs to rise and avoid choosing the wrong loan option if they feel consolidation is right for them.