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Pros and cons of consolidating student loans

During this process, you also are able to choose your servicer from the list of current Direct Loan servicers.

So, if you're happy with one of these servicers already, you could stay together.

You may gain access to other perks through consolidation, like Public Student Loan Forgiveness and some income-driven repayment (IDR) plans (new income-based repayment, Pay As You Earn, and Revised Pay As You Earn), you may gain access to through consolidation.

The real questions that need to be answered are “How Much will this cost to repay?

” and “How much time until I am student loan debt free?

When you consolidate, you essentially take out a new loan that pays off all of your other loans.

This makes life easier because you only have to make one payment to one servicer for your federal student loans.

And while that's a great help to many, consolidation can come with many cons to balance out these pros. The length will depend on how much you consolidate (see below).

This decreases your monthly payments but likely increases how much you pay overall (as you pay significantly more in interest over the lifetime of the loan).

If you are going to consolidate, you should probably do it during your first year or two of repayment; otherwise, it might not be worth it.

Remember, your Consolidation loan is a new loan, not an extension of your older loans.

If your interest rates are already fixed, you won't get a lower rate by consolidating—even if it appears that way.

Consolidation interest rates take the weighted average of the rates on your underlying loans, then round that number up to the nearest 1/8th of a percent. Many borrowers confuse consolidating with refinancing loans at a lower interest rate.

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