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Cons of consolidating student loans

By combining your interest rates, you also lose the ability to employ a favorite tactic of financial planners for paying down debt: targeting the most expensive debt, the loan with the highest interest rate, first.What's more, consolidation typically results in the borrower paying more in total interest because consolidated loans are generally stretched out over a longer period, says Jessica Ferastoaru, a student loan counselor with Take Charge America.2.

But that hasn't been the case for the past decade, since the government stopped issuing student loans with variable rates.If you consolidate your loans now, your new rate will be based on a weighted average of all your loans' interest rates.So, for a simplified example, if you have two loans, one for $10,000 at 4% interest and one for $5,000 at 6%, your consolidated loan will have a $15,000 balance and a 4.7% interest rate.If you currently have multiple student loans, you could benefit from a consolidation loan on your student debt.You may be able to extend your repayment terms, pay a lower average interest rate, reduce your monthly payment amount, fix your interest rate or simply benefit from having a singular, simplified and streamlined monthly payment amount.Not all student loan debts can be consolidated, although most federal loans can.

Loans that can be consolidated include direct subsidized and unsubsidized loans, subsidized and unsubsidized Stafford loans, direct PLUS loans, SLS loans, Federal Perkins loans and Health Education Assistance loans, among others.

The result is a single monthly payment instead of multiple payments. Direct PLUS Loans received by parents to help pay for a dependent student’s education cannot be consolidated together with federal student loans that the student received.

Loan consolidation can also give you access to additional loan repayment plans and forgiveness programs. Refer to the complete list of federal student loans eligible for consolidation in the application.

Consolidating those loans into a single new one can simplify your payments, especially if your loans are with different loan servicers, the companies that oversee your payments.

It can also be a way to get into repayment plans you otherwise wouldn't be eligible for.1. One of the myths of consolidation is that it makes your debt less expensive by lowering your interest rate.

You must consider all of the cons of debt consolidation before making any decisions.