Student Loan Debt Consolidation: Top 3 Benefits

Posted on July 6, 2009
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There are many myths and untruths floating around about student loan debt consolidation. It is important that you have all the facts about this important financial decision before taking any steps toward consolidating academic debt, because it is not for everyone. However, there are three main benefits of student loan debt consolidation that you should consider before making that decision.

1. It is simply much easier to manage one loan through one lender than many loans through several lenders. The average student accumulates two loans per term, or four loans per year, one subsidized and one unsubsidized. That means if you have earned an Associate Degree you have around eight student loans with one or two different lenders. If you have earned a Bachelor’s Degree, you could have as many as sixteen student loans with several different lenders.

If that sounds complicated, it’s because…well, it is! Tracking that many loans is nearly impossible, especially when you consider that interest rates and other factors may change from year to year, loan to loan. Student loan debt consolidation will make your academic debt manageable and easy to comprehend.

2. You could save quite a bit on interest when you use student loan debt consolidation. The interest rates on your loans likely vary, but if you have even just a few loans with interest rates that are higher than the rate you can obtain through consolidation, you will save hundreds of dollars in the long run. Short term, you will see financial benefits as finance charges are eliminated or reduced monthly.

3. Student loan debt consolidation is a chance to start over. If you have loans in default, you can use the consolidation to pay those off and start fresh with a new, single loan. Starting over also means that you can change your payment terms to something that works with your budget and lowers your monthly payments so that you can avoid going into default in the future.

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